state of the outsourcing, shared services, and operations industry … · 2018-08-09 · state of...

State of the outsourcing, shared services, and operations industry 2017April 2017

2

Document Classification: KPMG Confidential

© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.NDPPS 646189

Keeping it real in 2017: Don’t panic, but we’ve hit another state of flux

— The outsourcing and shared services market is in a state of continuing flux— Management layers have increasingly separate priorities adding to organizational

confusion— The latest change agents commonly feeding each other and added together are

“digital.” They are a combination of business and technology drivers:- Business drivers

— The need to become more customer-centric— The need to rapidly respond to customer requirements

- Technology change— Cloud computing (As-a-Service IT)— Automation

— Large companies are investing in themselves but also looking to suppliers for solutions

— Smaller companies are doing what they do best: disrupting and surviving— Digital is what you say it is…

Automation Cloud

Customer first

Digital?

HfS Research in conjunction with KPMG, State of Business Operations 2017 N=454 Enterprise Buyers

3



Key findings

— Increasing effectiveness of outsourcing stalls as outsourcing buyers look to the next big thing – digital, as-a-service, “Digital OneOffice”

— The increasing need for customer-centric business processes Is hampered by the disconnect between management layers

— Senior management layer impacts perspective – senior managers are more optimistic about change, want to drive automation and head count reduction initiatives

— Size matters – large organizations are leading the way in transformation, and are willing to invest in digital, automation, and new technologies

The “Digital OneOffice” will emerge from Digital + Automation

The People-First Digital Organization

Real-time actionable data for greater personalization

Design Thinking

Mobile Engagement

Social/Interactive

The Nervous System, ingesting and processing all inputs

The CircularSystem

The Neural System

The Enabling Intelligent OneOffice TM

Digital Underbelly

— Automation of processes, RPA

— Digitization of Documents

— Standardization of processes

Intelligent Digital Support Functions

— IT Support, Finance, HR, Procurement, Supply Chain

Intelligent Digital Processes

— Predictive and Operational Analytics

— Cognitive IOT


4



C-suite wants Digital OneOffice integration, predictive real-time data and speed-to-market –while aggressively driving down costs

20%

22%

24%

26%

29%

30%

31%

31%

42%

48%

46%

38%

55%

50%

45%

48%

48%

43%

19%

19%

17%

13%

17%

20%

15%

15%

8%

12%

12%

21%

5%

4%

5%

6%

6%

7%

Invest in cognitive technologies and machine learning to reduce reliance on mid-/high-skilled labor

Invest in process automation and robotics to reduce reliance on low-skilled labor

Policies that restrict the hiring of people

Improve the quality of operations talent

Scalable/flexible services

Accelerate speed to market with new products

Create real-time data that supports predictive, not reactive decisions

Align middle/back office operations to improve customer experiences

Drive down operating costs

Mission Critical Increasingly Important Emerging Not a Directive

How critical are the following C-suite directives to your operations strategy?


5



C-suite directives: High tech most focused on change and growth


0%

20%

40%

60%

80%

Drive down operatingcosts

Accelerate speed-to-market with new

products

Create real-time datathat supports predictive,not reactive, decisions

Align middle-/back-officeoperations to improvecustomer experiences

Improve the quality ofoperations talent

Policies that restrict thehiring of people

Invest in processautomation and robotics

to reduce reliance onlow-skilled labor

Invest in cognitivetechnologies and

machine learning toreduce reliance on mid-

/high-skilled labor

BFSI Manufacturing Healthcare and Life Sciences Retail Software and High Tech Energy and Utilities


6



Enterprise leadership has automation as top investment priority for 2017-2018

How much investment is your organization intending to make in the following initiatives in the coming two years?


43%

33%

34%

32%

28%

28%

30%

20%

25%

30%

29%

27%

23%

20%

19%

20%

Robotic automation of processes

Customer-centric digital enablement (social/mobile/interactive)

Analytics solutions

SaaS platforms replacing on-premise solutions

Training and workforce development/change management

Cognitive computing solutions

Public cloud investments

Hiring millennials

SVP

VP and below

7



Executive summary

Operating model— 84% of respondents have a centralized model: shared

services and outsourcing (18%), global shared services (GBS) and outsourcing (20%) and GBS (11%)

— GBS is most prevalent in organizations with revenues larger than $5 billion (16%)

— Software/ high tech and manufacturing are also strong users of GBS (19% and 15% respectively)

— GBS use stronger in Asia Pacific (17%)

Operating model changes— Sustained growth in GBS and shared services— Agreement across suppliers, buyers, and advisors— Large change in North America with shift from

decentralized models— Smaller companies are adopting more centralized models— 90% of software and high tech organizations looking to

expand GBS


8



Executive summary (continued)

Operating investments— Top 4 priorities

1. Customer-centric digital enablement (social/mobile/interactive)

2. RPA/process automation3. Analytics solutions4. SaaS platforms to replace on-premise solutions

— SVPs+ very keen on RPA; 43% said they would make significant investment.

— Software/high tech keen on investments across the board; 63% cited SaaS.

— BFSI industry is the top investor in RPA (44%).— Largest organizations making much stronger plans across

the board. 40% cited focus on customer-centric digital.

C-suite directives— Cost still number one for all company size groups and all

regions (except Asia Pac); 41% say cost is mission critical.— SVP+ want more internal alignment (31%); but only 16% of

VP and below want it.— Cost is the number one priority for Banking (52%), Utilities

(50%), Healthcare (45%), and Manufacturing (37%).— Speed-to-market is the top priority for Software and High

Tech (48%).— Scalability and flexibility are the main priorities for Retail

(37%).— Big discrepancy between senior managers and middle

management:- 31% of senior managers consider back/middle office

alignment mission critical; only 16% of middle managers want back/middle office alignment.

- 24% of senior managers consider policies that restrict hiring of people mission critical, but just 8% of middle managers want these policies.


9




Outsourcing use— IT continues to be the largest user of outsourcing, with 94%

of organizations using at least some for both applications management and infrastructure. However, areas including F&A, supply chain and logistics, procurement, customer service/sales support, and sales outsource higher proportions of their processes. More than half of the responding enterprises have outsourced in excess of 50% of these processes; approximately 40% of IT processes are outsourced.

— Overall outsourcing use has increased since 2013, with outsourcing penetrating more business functions; sales, marketing, and procurement, in particular, are seeing a big boost.

Shared services use— The IT function is more likely to have some element of

shared service delivery, but less of the function is actually run from the shared service.

— Shared services use was similar to our 2013 findings, with similar use across all business functions.

Destinations/future plans— 43% of companies that outsource are looking to shift to a

volume/output based “as-a-service” contract at the end of the current contract cycle; this is similar across back-office, front-office, and IT process outsourcing.

— The move to “as-a-service” is even greater than our July 2106 – where the shift was 33% Over 20% of buyers looking to change supplier or insource.

— IT and HR are most likely to change (27%).RPA adoption— Large companies lead the way in adoption across business

processes; $1Bn+ enterprises showed 11-23% adoption across processes (average 19%); <$1Bn showed 2%-14% adoption, but averaged only 5%.

— Senior managers are driving the adoption.


10




Offshore use

— Offshore use most common in IT (38%) and F&A (38%); customer service is next biggest user (34%)

— Company size is the biggest indicator of offshore use; 38% of $5Bn+ organizations, on average, across the processes; 33% of >$1Bn and <$5Bn organizations; 21% of <$1Bn organizations; 78% of >$1Bn+ companies use some.

Offshore plans

— Plans mostly include a small increase, with IT seeing the biggest increases; 12% for ADM, and 16% for infrastructure.

— Some organizations plan to reduce reliance on offshore; the Trump administration and Brexit, along with greater opportunities for process automation, are causing some disquiet in the model; we have seen a net decline of 4% in F&A offshoring, and 3% in HR offshoring.

Operating model maturity— Overall operating model maturity increased ~ 25% since

2014, with average maturity across all measures around 3.5 on a 1 to 5 scale. This is up from 2.8 in 2014.

— Larger organizations feel they have more mature operations; again the biggest single differentiator was company size. From an industry perspective, software and high tech firms also saw themselves as highly mature, rating themselves on average at 4.0.

— Services buyers believed themselves to be more mature than advisors and suppliers did . They rated themselves at 3.5, while advisors rated them at 2.7, and suppliers at 2.9.


11




Service provider selection— ROI (21%), business outcomes (16%), and automation (11%) were the top 3

selection criteria for an external service provider. — ROI, not cost, was the most important consideration for buyers. — The top selection criteria were the same across industries.— Smaller organizations place more importance on traditional selection criteria

like industry experience and service quality than business outcomes and automation.

Effectiveness of outsourcing— Only 36% think outsourcing has been very effective at lowering costs as

anticipated. The figure is less in other areas: flexibility (32%); access to technology (30%); and standardization (30%).

— Suppliers are much more convinced of the basic effectiveness of outsourcing; lowering costs (51%); flexibility (41%); and standardization (40%).

— Larger enterprises and senior managers are more convinced of its effectiveness.

Describe current provider— Almost a quarter believe their current primary

service provider is a “true partner.” There’s a big disconnect between management layers; 35% of senior managers and only 15% of middle managers agree.

— 42% – the largest group of respondents –said their provider was a “competent partner.”

— Middle managers picked “efficient vehicle to drive out cost and improve efficiencies” (31%) in preference to “true partner.”

— Again, larger organizations made up the bulk of “true partner” responses, with only 8% of enterprises <$1Bn believing this to be the case.


12



— Larger buyer organizations want true partnerships, with 46% stating this was the ideal role their primary service provider should play.

— Smaller firms just want competence; this gives the impression that they have been and are being badly served by the current crop of service providers.

— A customer-first mindset is a must, even for operations. Organizations need to start fixating on customers, with all parts of the enterprise working to ensure customer-centricity. Applying design thinking to the Digital OneOffice approach helps to bring the customer into the design cycle, and ensures customer-first aims are achieved.

— Fix the disconnect between the management layers. This disconnect issue has cropped up in our last three surveys. Leadership knows where it wants to go, but middle management isn’t ready and can’t help drive the operational change required. This gap in understanding needs to close if enterprise organizations want a more effective operating model.

Recommendations


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— Becoming more customer-centric and reacting to the as-a-service world requires more than investment in technology or “digital.” It has to become part of your organization’s DNA.

— Choose providers that offer more than just cost savings. Service providers need to be able to deliver outcomes that impact your customers’ outcomes.

— Data is key – but don’t just store it. While understanding customers and making a modern, customer-centric enterprise work effectively requires data; collecting and storing it in a data lake is a waste unless you do something with it. Automation is the key to producing higher quality, more reliable data sets. Employees can start to use it more effectively to drive insights, and further apply technology to move into machine learning and cognitive computing.

— Smaller organizations need to think big, and larger enterprises need to think small. Small firms need to plan and think aboutmaking investments in key process improvements like automation. Large organizations need to think about how to better utilize legacy investments and make sure they fit into plans, particularly given that without modern platforms, process alignment is much more difficult.

Recommendations (continued)


14



Work as a team: Heal the disconnect and unrealism between leadership ambition and middle management operational challenges (internal and external)

Think big! with an attitude to write off legacy. Incremental fixes clearly do not work for all stakeholders. Stop retrofitting!

Become a student again: This is about humans generating more creative value, finding more problems through collaboration, and learning how embrace the digital and intelligent automation tools available

This is not about jobs going away, it’s about the changing nature of work. A third of today’s workforce is made up of millennials seeking different work experiences

To create a new experience in the industry and achieve results, we must be brave enough to begin writing off legacy, or we’llnever evolve

To compete in the digital world…

01

02

03

04

05HfS Research in conjunction with KPMG, State of Business Operations 2017 N=454 Enterprise Buyers

15



Operating models continue to drive toward GBS

BU BUBU BU BU


OPERATING MODEL SHIFT

16% 34% 18% 20% 11%

P1

P1

P1

P1

P1 P1 P1

P1

P1

DECENTRALIZED PROCESSES

Processes within functions performed by BUs on their own behalf

CENTRALIZED PROCESSES

Process and outcomes consolidated and owned by centralized functions; BUs are customers

SHARED SERVICES/OUTSOURCING

Processes consolidated to a regional service entity and operated as a business with governance shared with BUs

GLOBAL SHARED SERVICES/OUTSOURCING

Business Services model with global scope and delivery

GBS

GBS model extended across multiple functions with end-to-end global process ownership and accountability

CORPORATE CORPORATE

P1 P1 P1

BU BU BU

CORPORATE

BU BU BU

CORPORATE

P1 P2 P3 P4

Business Services Entity

BU BU

CORPORATE

P1 P2 P3 P4

Business Services Entity Global Business ServicesHire to Retire, RTR, OTC, PTP

P1 | P2 | P3

Third-Party Third-Party Third-Party

Int’lBU

Int’lBU

P1 Process 1, 2 etc.

16



Company size is the biggest determinant of operating model

Operating model evolution – Driven across industriesWhich of the following best describes your organization's operating model for delivering services today?

15%

15%

17%

18%

23%

20%

12%

33%

32%

28%

40%

26%

42%

36%

19%

15%

23%

29%

13%

15%

14%

24%

22%

23%

11%

19%

15%

22%

10%

15%

9%

3%

19%

10%

11% 4%

BFSI

Manufacturing

Healthcare

Retail

Software and High Tech

Energy and Utilities

Other industries

Decentralized processes Centralized processesShared Services/Outsourcing Global Shared Services/OutsourcingGlobal Business Services Other (please specify)

Industry

19%

16%

14%

32%

42%

24%

15%

20%

17%

23%

13%

30%

6%

9%

16%

6%<$1Bn

>$1Bn <$5Bn

>$5Bn

Size

Region

13%

15%

22%

36%

31%

34%

17%

23%

12%

23%

23%

15%

10%

7%

17%

North America

EMEA

Asia Pacific


17



Operating model – All models expected to grow, except decentralized

Over the next 2 years, will your company increase or reduce its reliance on the following operating models for general and administrative functions?

36% 38% 40% 35%25%

26% 21% 22%24%

13%

-7% -7% -4% -7%-16%

-2% -3%-1% -1%

-10%

IT Outsourcing Business Process Outsourcing Shared Services Global Business Services Decentralized processes

Increase moderately Increase significantly Reduce moderately Reduce significantly


18



Operating model – Industry changesOver the next 2 years, will your company increase or reduce its reliance on the following operating models for your general and administrative functions?

63%58%

63% 60%

38%

66%71% 73% 71%

39%

53% 55% 57%53%

30%

68%

53%

61%66%

42%

67%63%

90%

67%

40%

76%

63% 66%

59% 56%53% 53%

47% 46%

31%


BFSI Manufacturing Healthcare and Life Sciences Retail Software and High Tech Energy and Utilities Other IndustriesHfS Research in conjunction with KPMG, State of Business Operations 2017 N=454 Enterprise Buyers

19



Stakeholders see similar patterns in operating model development

Over the next 2 years, will your company increase or reduce its reliance on the following operating models for your general and administrative functions?

63% 68% 65%73% 77%

62%

85%75%

66%79% 75%

66%

35%43% 43%


Increase

Decrease

-8% -6% -9%-14%

-7% -10%-4% -5% -6%-6% -2%

-9%

-38%-29% -30%

Advisor Supplier Buyer

HfS Research in conjunction with KPMG, State of Business Operations 2017 N=829 454 Enterprise Buyers, 265 Service Providers and 110 Advisor/Consultants

20



Outsourcing plans have moderated over the last 2 years

Over the next 2 years, will your company increase or reduce its reliance on the following operating models for your general and administrative functions?

HfS Research in conjunction with KPMG, State of Outsourcing 2014 N=312 Enterprise BuyersHfS Research in conjunction with KPMG, State of Business Operations 2017 N=454 Enterprise Buyers

37%

40%

35%

25%

24%

22%

24%

13%

-7%

-4%

-7%

-16%

-3%

-1%

-1%

-10%

Outsourcing (combined)

Shared Services

Global Business Services

Decentralized processes

59%

37%

46%

13%

13%

24%

10%

4%

-6%

-3%

-3%

-20%

-2%

-1%

-1%

-7%

51%

57%

51%

12%

64%

57%

52%

-10%

2014 2017

Now 2014Net increase/

decrease

Increase moderately Increase significantly Reduce moderately Reduce significantly

21



Operations investmentHow much investment is your organization intending to make in the following initiatives in the coming 2 years?

HfS Research in conjunction with KPMG, State of Outsourcing 2017 N=454 Enterprise Buyers

20%

23%

24%

25%

29%

31%

32%

32%

42%

38%

35%

44%

33%

41%

30%

37%

22%

20%

25%

21%

19%

17%

16%

21%

8%

10%

10%

5%

11%

4%

14%

5%

7%

8%

7%

4%

8%

6%

7%

4%

Hiring millennials





Analytics solutions



Significant investment Some investment Limited/modest investment No investment Don't know/undecided

22



Operations investment – SVP+ onlyHow much investment is your organization intending to make in the following initiatives in the coming 2 years?

20%

28%

28%

30%

32%

33%

34%

43%

43%

40%

44%

39%

35%

37%

38%

25%

22%

20%

20%

16%

19%

22%

18%

13%

8%

8%

6%

10%

11%

6%

5%

14%

8%

3%

2%

5%

3%

2%

5%

5%

Hiring millennials






Analytics solutions


Significant investment Some investment Limited/modest investment No investment Don't know/undecided


23



Operations investment – Senior managers want automation

How much investment is your organization intending to make in the following initiatives in the coming 2 years?


20%

23%

24%

25%

29%

31%

32%

32%

Hiring millennials




SaaS platforms replacing on-premisesolutions

Analytics solutions


Customer-centric digital enablement(social/mobile/interactive)

Significant investment

20%

30%

28%

28%

32%

34%

43%

33%

20%

19%

20%

23%

27%

29%

25%

30%

VP and Below SVP+

12%

10%

16%

17%

22%

25%

20%

23%

21%

26%

24%

22%

25%

28%

30%

33%

23%

27%

26%

34%

38%

39%

40%

36%

>$5Bn >$1Bn <$5Bn <$1Bn

Large organizations

looking to make investments

Management layer Company size

24



C-suite directives – Management layer looking for alignment and to restrict hiring



15%

17%

18%

22%

22%

29%

29%

31%

41%


Invest in cognitive technologies/machine learning toreduce reliance on mid-/high-skilled labor

Invest in process automation and robotics to reducereliance on low-skilled labor

Align middle and back-office operations to improvecustomer experiences



Create real-time data that supports predictive, notreactive decisions



Mission Critical

24%

20%

22%

31%

26%

29%

31%

30%

42%

8%

15%

15%

16%

20%

28%

28%

32%

40%

VP and Below SVP+

6%

16%

15%

18%

18%

28%

21%

24%

36%

21%

15%

16%

23%

24%

24%

29%

31%

40%

11%

20%

22%

23%

22%

35%

32%

35%

44%

>$5Bn >$1Bn <$5Bn <$1Bn


25



C-suite directives – SVP+ onlyHow critical are the following C-suite directives to your operations strategy?

20%

22%

24%

26%

29%

30%

31%

31%

42%

48%

46%

38%

55%

50%

45%

48%

48%

43%

19%

19%

17%

13%

17%

20%

15%

15%

8%

12%

12%

21%

5%

4%

5%

6%

6%

7%

Invest in cognitive technologies and machine learning to reduce reliance on mid-/high-skilled labor

Invest in process automation and robotics to reduce reliance on low-skilled labor





Create real-time data that supports predictive, not reactive decisions

Align middle and back-office operations to improve customer experiences


Mission Critical Increasingly Important Emerging Not a Directive


26



C-suite directives by industryHow critical are the following C-suite directives to your operations strategy?


58%

33%

18%

23%

35%

23%

25%

28%

13%

30%

17%

30%

35%

26%

22%

22%

22%

26%

50%

25% 35

% 40%

35%

30%

20%

15%

35%41

%

41%

41%

18%

41%

35%

29%

18%

24%

67%

67%

67%

44%

44%

33%

11%

11%

44%

37%

32% 42

%

42%

26%

37%

37% 42

%

21%

21%

17%

17%

28%

17%

17% 21

%

14%

7%

Drive down operating costs Scalable/flexible services Accelerate speed-to-marketwith new products

Create real-time data thatsupports predictive, not

reactive decisions

Align middle- and back-officeoperations to improvecustomer experiences


Policies that restrict the hiringof people

Invest in process automationand robotics to reduce

reliance on low-skilled labor

Invest in cognitivetechnologies/machine

learning to reduce relianceon mid-/high-skilled labor

46%

32% 34

%

24%

20%

20%

10%

22%

22%

42%

19%

36%

28%

11%

14%

11%

14%

8%

41%

19%

30%

30%

15%

11%

4%

19%

33%

33%

24%

14%

24%

14%

5% 5%

30%

35%

40%

20%

15%

30%

0% 0% 20%

62%

14% 19

%

29%

5%

33%

10%

10% 19

%

36%

36%

30% 33

%

23%

23%

10%

21%

20%

Drive down operating costs Scalable/flexible services Accelerate speed-to-marketwith new products

Create real-time data thatsupports predictive, not

reactive decisions

Align middle-/back-officeoperations to improvecustomer experiences


Policies that restrict the hiringof people

Invest in process automationand robotics to reduce

reliance on low-skilled labor

Invest in cognitivetechnologies/machine

learning to reduce relianceon mid-/high-skilled labor

BFSI Manufacturing Healthcare and Life Sciences Retail Software and High Tech Energy and Utilities Other industries

SVP+

VP and below

27



Buyers less focused on cost than advisors and suppliers



47%

25%

15%

27%

17%

9%

23%

17%

8%

55%

39%

26%

37%

19%

11%

28%

19%

7%

41%

31% 29% 29%

22% 22%18% 17% 15%

Drive downoperating costs

Accelerate speed tomarket with new

products

Scalable/flexibleservices

Create real-timedata that supports

predictive, notreactive decisions

Align middle- andback-office

operations toimprove customer

experiences

Improve the qualityof operations talent

Invest in processautomation and

robotics to reducereliance on low-

skilled labor

Invest in cognitivetechnologies and

machine learning toreduce reliance onmid-/high-skilled

labor

Policies that restrictthe hiring of people

Advisors Suppliers Buyers

28



IT is biggest user of managed services and outsourcing

What proportion of each of the following business functions is currently outsourced or executed in a shared services center?

HfS Research in conjunction with KPMG, State of Business Operations 2017 N=454 Enterprise Buyers, HfS Research 2013, N=343 Enterprise Buyers

6%

6%

20%

18%

20%

21%

25%

25%

22%

30%

10%

10%

11%

13%

15%

17%

15%

15%

18%

21%

IT ADM

IT and Network Infrastructure Support

Finance and Accounting

Human Resources

Supply Chain and Logistics

Industry-specific process (e.g., claims processing)

Procurement

Customer Service/Sales Support

Marketing

Sales

No outsourcing No shared services

6%

21%

26%

10%

14%

18%

IT

Back

Front

No outsourcing No shared services

Outsourcing/shared services skewed toward IT & back-office

29



Outsourcing and shared services useWhat proportion of each of the following business functions is currently outsourced or executed in a shared services center?

30%

31%

34%

35%

37%

32%

35%

38%

41%

44%

40%

40%

40%

40%

39%

45%

43%

45%

44%

44%

70%

71%

74%

75%

76%

77%

78%

83%

85%

88%

Sales

Marketing




Procurement

Human Resources

Finance & Accounting

IT ADM


Outsourcing Shared Services Total

Outsourcing/shared services skewed toward IT & back-office

31%

35%

42%

40%

42%

44%

71%

77%

86%

Front

Back

IT

Outsourcing Shared Services


30



Outsourcing use expands – Shared services staticWhat proportion of each of the following business functions is currently outsourced or executed in a shared services center?


30%

31%

34%

35%

37%

32%

35%

38%

41%

44%

40%

40%

40%

40%

39%

45%

43%

45%

44%

44%

Sales

Marketing




Procurement

Human Resources


IT ADM



Now 2013

9%

13%

14%

21%

23%

18%

22%

21%

37%

39%

38%

35%

47%

42%

42%

48%

45%

52%

46%

46%

Sales

Marketing

Procurement



Human Resources

Customer Service


IT ADM

IT and Network Infrastructure support


Outsourcing use expands across process areas

31



Outsourcing use expands across process areas

Outsourcing use expands – Shared services staticWhat proportion of each of the following business functions is currently outsourced or executed in a shared services center?



30%

31%

32%

34%

35%

35%

37%

38%

41%

44%

9%

13%

14%

22%

18%

23%

21%

21%

37%

39%

Sales

Marketing

Procurement


Human Resources

Industry-specific process (e.g., claimsprocessing)



IT ADM


2013 Now39%

40%

40%

40%

40%

43%

44%

44%

45%

45%

42%

45%

42%

35%

38%

48%

46%

46%

52%

47%


Customer Service


Marketing

Sales

Human Resources

IT and Network infrastructure support

IT ADM


Procurement

2013 Now

32



7% 10% 8% 7% 9% 8% 6% 6% 8% 8%

11%13%

10% 13% 10% 9% 7% 9% 9% 8%

19%16%

12%16% 16%

14% 16% 16% 14% 11%

24% 21%

14%13% 14%

16%13% 11% 14%

12%

20% 20%

21%19% 16% 19%

17% 17% 15%13%

8% 9%

7% 8% 9% 9%12% 9% 10%

9%

6% 5%

9% 4% 6% 5% 8% 7% 4%9%

6% 6%18% 20% 20% 21% 22% 25% 25% 30%

IT Application

Maintenance &

Development

IT and Network

Infrastructure Support Human Resources

Finance and

Accounting

Supply Chain and

Logistics

Industry-specific

Process (i..e. Claims

Processing) Marketing Procurement

Customer Service /

Sales Support Sales

Shared services and outsourcing useWhat proportion of each of the following business functions is currently managed and executed in a shared services center or outsourced?


More enterprises use IT outsourcing - but if you outsource a business process you outsource a larger proportion of the process

10% 10% 12% 13% 15% 12% 8% 10% 10% 14%

12% 13% 14% 15% 11% 11%11% 12% 14% 12%

21% 20% 17% 14% 20%15% 17% 16% 16% 12%

18% 14% 20%12%

14%15% 16% 13% 11% 13%

18% 21% 15%19% 12%

19% 17% 19% 18% 13%

8% 7% 6%10% 9% 10% 9% 9% 8%

8%

3% 4% 5% 5% 5% 4% 6% 4% 5%6%

10% 10% 11% 13% 15% 15% 15% 17% 18% 21%

IT ADM IT and NetworkInfrastructure

Support

Finance &Accounting

Human Resources Procurement CustomerService/Sales

Support

Supply Chain andLogistics

Industry-specificprocess (e.g., claims

processing)

Marketing Sales

100% 75-99% 50-74% 25-49% 10-25% 5-9% 1-5% 0%

33



Sourcing plansWhat are your plans regarding any outsourcing / managed services agreements you have for any of the following?


14% 15%24% 25% 28% 29% 29% 30% 33% 38%

33% 33%32% 29%

33% 25% 24% 22%26% 24%

26% 25%20% 23%

21%18% 21% 24%

20% 17%13% 13% 10% 10% 5%

13% 9% 11% 9% 8%10% 9% 8% 7% 5% 9% 11% 6% 5% 6%5% 5% 5% 6% 8% 5% 7% 7% 7% 8%


Support

Industry-specificprocess (e.g.,

claims processing)


Finance &Accounting

Human Resources Procurement CustomerService/Sales

Support

Marketing Sales

In-house Renew current provider same contract (FTE-based) Renew current provider AAS (volume/output-based)

Change provider similar contract (FTE-based) Change provider AAS contract (volume/output- based) Likely to insource

34



Sourcing plans – Where is the churn?Do you have plans to change providers or insource any outsourcing/managed services agreements for any of the following?


19%

21%

21%

23%

23%

24%

26%

27%

27%

27%


Sales

Marketing




Procurement

Human Resources

IT ADM


19%20%21%

25%25%25%

29%



Manufacturing

BFSI

Retail

Other Industries

Healthcare and Life Sciences

17%24%

26%

<$1Bn>$5Bn

>$1Bn <$5Bn

21%20%

31%

North America

EMEA

Asia Pacific

20%29%

VP and below

SVP+

Industry

Company size

Management layer

Region

35



Sourcing plans – Buyers look to as-a-service when contracts end

What are your plans for the following at contract end?


24%

25%

24%

22%

26%

32%

29%

33%

33%

33%

17%

18%

21%

24%

20%

20%

23%

21%

25%

26%

41%

43%

45%

46%

46%

52%

52%

54%

58%

59%

Sales

Human Resources

Procurement


Marketing





IT ADM

Renew current provider, same contract (FTE-based)Renew current provider, AAS (volume/output-based)

5%

9%

8%

11%

10%

10%

9%

13%

13%

13%

5%

5%

6%

6%

7%

8%

11%

9%

9%

10%

10%

14%

14%

17%

17%

18%

20%

22%

22%

23%


Marketing

Sales




Procurement


Human Resources

IT ADM

Change provider, similar contract (FTE-based)Change provider to AAS contract (volume/output-based)

36



Sourcing plans – Buyers look to as-a-service when contracts end

What are your plans regarding any outsourcing/managed services agreements for the following?


The shift to as-a-service accelerates with 43% of contracts shifting to the volume/output based as-a-service model

32%

35%

38%

38%

43%

33%

39%

32%

45%

46%

23%

25%

26%

27%

28%

30%

30%

32%

34%

36%

55%

60%

64%

65%

71%

63%

69%

64%

79%

82%

Sales

Marketing


Human Resources




Procurement


IT ADM

Renew/change same contract (FTE-based)Renew/change provider AAS (volume/output-based)

33%

38%

46%

26%

29%

35%

59%

67%

81%

Front

Back

IT

Renew/change same contract (FTE-based)Renew/change provider AAS (volume/output-based)

37



43% 42% 37% 37% 41% 43%51% 50%

41%48%

26% 26%27% 29% 26% 26%

21% 22%27%

21%

12% 13% 18% 17% 16% 15% 11% 13% 17% 17%

13% 12% 12% 11% 12% 11% 10% 10% 10% 9%6% 7% 6% 7% 5% 5% 6% 6% 5% 5%


claimsprocessing)


IT and NetworkInfrastructure

Support

IT ADM CustomerService/Sales

Support

Procurement Sales Marketing Finance &Accounting

HumanResources

Doing nothing in RPA Evaluating RPA Piloting RPA Implementing/using RPA Fully implementing production-scale RPA

RPA adoption across business processesHow are you approaching RPA across the following functions today?


38



Approach to RPA – Larger companies and senior managers take the lead

How are you approaching RPA across the following functions today?



14%

15%

15%

16%

17%

17%

18%

19%

19%

19%

Human Resources


Marketing

Procurement


Sales

IT ADM




Implementation

18%

20%

20%

22%

26%

23%

25%

27%

22%

22%

10%

10%

11%

12%

10%

12%

12%

12%

16%

16%

VP and below SVP+

4%

6%

4%

7%

4%

4%

2%

2%

7%

14%

11%

14%

18%

17%

20%

18%

20%

21%

20%

18%

22%

19%

15%

19%

17%

20%

21%

21%

23%

23%

>$5Bn >$1Bn <$5Bn <$1Bn

39



6% 7% 8% 7% 6% 7% 6% 5% 7% 6%

10% 9%14% 10% 8% 9% 7% 9% 10% 10%

22% 21%16%

17%15% 14% 16% 14% 12% 12%

15% 16% 12%11% 16% 14% 13% 13% 10% 11%

19% 18%14%

15% 16% 13% 14% 17%14% 12%

11% 8%10%

10% 9%9% 8% 9%

8% 8%

5%5%

3%4% 3% 6% 6% 4%

6% 7%

14% 16%23% 26% 26% 28% 28% 28% 33% 33%


Support

Finance &Accounting

CustomerService/Sales

Support


processing)

Human Resources Procurement Supply Chain andLogistics

Sales Marketing

100% 75-99% 50-74% 25-49% 10-25% 5-9% 1-5% No offshore

Offshoring and nearshoring useHow much offshoring/nearshoring do you currently use to service your business and IT operations, whether with an outsourcing provider or within your own shared services?


40



Bigger companies and technology-centric industries drive offshore

How much offshoring/nearshoring do you currently use to service your business and IT operations, whether with an outsourcing provider or within your own shared services?


Company size

Management layer

Region

Industry

29%

30%

30%

31%

32%

32%

34%

37%

38%

38%

Marketing


Sales

Procurement

Human Resources



IT ADM



29%30%

33%34%35%36%37%

Retail

Other Industries

Manufacturing


BFSI



21%33%

38%

<$1Bn>$1Bn <$5Bn

>$5Bn

27%36%

39%

North America

EMEA

Asia Pacific

29%

38%

VP and below

SVP+

41



Bigger companies and technology-centric industries drive offshore

How much offshoring/nearshoring do you currently use to service your business and IT operations, whether with an outsourcing provider or within your own shared services?


Company size

Management layer

Region

Industry

14%

16%

23%

26%

26%

28%

28%

28%

33%

33%

IT ADM





Procurement

Human Resources


Sales

Marketing

13%16%

21%25%26%

33%37%

Energy and UtilitiesSoftware and High Tech

ManufacturingHealthcare and Life Sciences

BFSIOther Industries

Retail

21%22%

52%

>$5Bn

>$1Bn <$5Bn

<$1Bn

14%

23%

35%

Asia Pacific

EMEA

North America

20%

30%

SVP+

VP and below

42



-8% -12% -9% -8% -11% -9% -9% -11% -8% -9%

-9% -7% -8% -8%-7%

-5% -8% -9% -8% -10%-4% -6% -5% -5%

-5%-7% -5%

-9%-5%

-7%

22% 19% 18% 15% 15% 14% 15% 14% 13% 14%

9% 10%6% 8% 8% 7% 7% 6% 7% 6%

7% 7% 3% 5% 3%6%

3% 5%4%

3%

Changes in offshoring, going forwardHow will your use of offshoring related to outsourcing change over the next 2 years?


-9% -10% -6% -10% -9% -9% -10% -10% -12% -8%-8% -9%

-7%-6% -8% -9% -7% -4%

-8% -9%

-6% -7%-8% -7%

-9% -7% -8%-7%

-7% -8%

21% 19% 16% 18% 16% 16% 16% 14% 16% 16%

9% 9% 8% 6% 7% 9% 7% 9% 7% 5%

4%4% 5% 5% 6% 4% 3% 3% 2% 4%

IT ADM IT and NetworkInfrastructure Support

Marketing Procurement Finance & Accounting CustomerService/Sales Support


processing)

Sales Supply Chain andLogistics

Human Resources

Decreasing offshore 10% Decreasing offshore 20% Decreasing offshore >20% Increasing offshore 10% Increasing offshore 20% Increasing offshore >20%

How will your use of offshoring related to shared services change over the next 2 years?

43



Offshoring/nearshoring specific functionsHow much offshoring/nearshoring do you currently use to service your business and IT operations, whether with an outsourcing provider or within your own shared services?


30%

30%

31%

32%

32%

34%

37%

38%

38%

11%

10%

13%

13%

18%

19%

35%

20%

28%


Sales/Marketing

Procurement

Human Resources



IT ADM



Now 2014

44



Changing use of offshoring since 2014How much has your use of offshoring/nearshoring changed, whether with an outsourcing provider or within your own shared services?


20% 19% 19% 18% 18%15% 14%

10% 2%

Sales/Marketing Supply Chainand Logistics

HumanResources

Finance &Accounting

Procurement CustomerService/Sales

Support


claimsprocessing)

IT and NetworkInfrastructure

Support

IT ADM

Net Increase

Increased use as a proportion of service across the board since 2014

Increase

Decrease

45



-4% -3%

5%

12%16%

7%3% 3% 3%

6%

2%

-1%

5%11%

6% 4%

-2%

1% 5% 9%

Finance &Accounting

HumanResources

Procurement IT ADM IT and NetworkInfrastructure

Support

CustomerService

Supply Chainand Logistics


claimsprocessing)

Sales Marketing


Changing use of offshoring, going forwardHow will offshore use change in outsourcing and shared services over the next 2 years?


Offshore expected to increase in IT – but for F&A and HR it is expected to decrease, particularly for outsourcing

Increase

Decrease

46



Changing use of offshoring – F&A and HR outsourcing

How will offshore use change in outsourcing and shared services over the next 2 years?


Banks and European enterprises look to reduce offshore in F&A and HR

Industry Company size Management layer

Region

-17.4%

14.6%

0.0%

-8.6%

9.1%

18.4%

-21.8%

9.1%

-10.8%

1.0%

-5.5%-3.4%

7.7%

-14.8%

-11.1%-11.7%

6.3%

-9.7%

-3.0%

17.4%

23.6%

-19.4%

0.0%

-11.5%

10.0%

-3.4% -2.9%

7.0%

-11.3%-13.6%

BFSI Manufacturing Health Retail Software Energy andUtilities

OtherIndustries

<$1Bn >$1Bn <$5Bn >$5Bn SVP+ VP andbelow

NorthAmerica

EMEA Asia Pacific

F&A HR

47



Changing use of offshoring – OutsourcingHow will offshore use change in outsourcing and shared services over the next 2 years?


22%

13%

18%20%

23%

12%15%

19%15%

-4%-3%

5%12%

16%7%

3% 3%6%

Finance & Accounting Human Resources Procurement IT ADM IT and NetworkInfrastructure Support


Support


Industry-specificprocess

Marketing

2014 Today

Increase

Decrease

48



Changing use of offshoring – Shared servicesHow will offshore use change in outsourcing and shared services over the next 2 years?


Decrease

20%

16% 16%

10%

14%12% 13% 14%

10%

2%

-1%

5%11%

6% 4%

-2%

1%9%

Finance & Accounting Human Resources Procurement IT ADM IT and Networkinfrastructure support


Support


Industry-specificprocess

Marketing

2014 Today

Increase

49



How mature are operating models today?


Relocate functionsHeadquarter functions and related BU staff relocated to low-cost geographies

Proximate to businessMaintain staff in current location

Location

IntegratedStandard solutions across BUs, geographies, and functions

IndependentSpecific to BUs, geographies, and functions

Standardization

Wide-rangingOrganized by process across BUs and geographies

Functionally focusedProcesses aligned and optimized within functional towers at BU levels

Process alignment

Rapid deploymentWillingness to impact people, change culture and invest in long-term strategy

MeasuredLow impact on people, culture, minimal investment

Agility

Run it like a businessService level measurement and accountability with transparent pricing

Staff functionCost center focus with modest measurement against metrics

Customer-centricity

Transactional and COECenters of scale and skill delivering transactional and analytical services

Transactional Transactional services delivering economies of scale

Service portfolio

Manual task automationImplementation of cognitive automation through out process stack

Manual processAutomation limited to macros/no strategy

Use of automation

People viewed as talentValue based view of people in process

People viewed as laborSee workforce as commodity/labor pool

Use of talent

Low maturity High maturity

3.6

3.6

3.5

3.4

3.6

3.5

3.3

3.6

50



How mature are operating models today? Today versus 2014


Relocate functionsHeadquarter functions and related BU staff relocated to low-cost geographies

Proximate to businessMaintain staff in current location

Location 3.6

IntegratedStandard solutions across BUs, geographies, and functions

IndependentSpecific to BUs, geographies, and functions

Standardization 3.6

Wide-rangingOrganized by process across BUs and geographies

Functionally focusedProcesses aligned and optimized within functional towers at BU levels

Process alignment 3.5

Rapid deploymentWillingness to impact people, change culture and invest in long-term strategy

MeasuredLow impact on people, culture, minimal investment

Agility 3.4

Run it like a businessService level measurement and accountability with transparent pricing

Staff functionCost center focus with modest measurement against metrics

Customer-centricity 3.6

Transactional and COECenters of scale and skill delivering transactional and analytical services

Transactional Transactional services delivering economies of scale

Service portfolio 3.5

Manual task automationImplementation of cognitive automation through out process stack

Manual processAutomation limited to macros/no strategy

Use of automation 3.3

People viewed as talentValue based view of people in process

People viewed as laborSee workforce as commodity/labor pool

Use of talent 3.6

Low maturity High maturity

2.9

2.9

2.8

2.9

2.7

2.8

2014 Rating

51



Maturity of operating models – High Tech firms the most bullish

Using the diagram of maturity measures, please indicate how mature your organization's operating model is for the following:

3.2

3.5

3.5

3.5

3.6

3.6

4

1 2 3 4 5

Other industries

Manufacturing


Retail

BFSI



Average MaturityLow High

3.2

3.5

3.6

<$1Bn

>$1Bn <$5Bn

>$5Bn

3.4

3.5

3.6

1 2 3 4 5

North America

Asia Pacific

EMEA

Low Average Maturity High

Industry

Company size

Region


52



Buyers believe they are more mature than do suppliers and advisors

Using the diagram of maturity measures, please indicate how mature your organization's operating model is for the following:

2.9

2.9

2.8

2.9

3.2

3.1

3.0

3.1

3.6

3.6

3.5

3.6

1.0 2.0 3.0 4.0 5.0

Location

Standardization

Process alignment

Customer-centricity

Maturity

Buyer

Supplier

Advisor

Low High

2.6

2.8

2.3

2.7

2.8

2.9

2.6

2.9

3.4

3.5

3.3

3.6

1.0 2.0 3.0 4.0 5.0

Agility

Range of internal services offered/serviceportfolio

Use of automation

Use of talent

MaturityLow High


53



Selection criteria – Outcomes and ROIWhich of the following is the most important criteria for selecting an external service provider for your organization?


1%

2%

2%

3%

3%

4%

5%

6%

8%

8%

11%

11%

16%

21%

Reference clients

Flexible pricing models

Partnerships

Financial stability

Global delivery scale

Existing relationship with our organization

Cost

Continuous improvement methodology

Depth of industry expertise & experience

Service quality/outstanding customer experience

Ability to automate manual processes

Ability to transform/reengineer existing processes

Ability to support business-outcome initiatives, as opposed to solely effort-based pricing

Ability to deliver timely return on investment

54



ROI, not cost, is critical for buyersWhich of the following is the most important criteria for selecting an external service provider for your organization?Which of the following is the most important criteria when your clients are selecting an external service provider?


16% 16%

8%

14%

4%

10%

4%

20%

2%

4%

0%

2%

0% 0%12% 21% 10% 9% 7% 10% 4% 15% 3%1% 1%

5% 1% 0%

21%

16%

11% 11%

8% 8%

6%5%

4%3% 3%

2% 2%1%

Ability to delivertimely return on

investment

Ability to supportbusiness-outcome

initiatives, asopposed to solely

effort-basedpricing

Ability toautomate manual

processes

Ability totransform /reengineer

existing processes

Depth of industryexpertise &experience

Service quality /outstanding

customerexperience

Continuousimprovementmethodology

Cost Existingrelationship withour organization

Financial stability Global deliveryscale

Flexible pricingmodels

Partnerships Reference clients


Ability to deliver timely

return on investment

Ability to support business-outcome

initiatives, as opposed to solely

effort-based pricing

Ability to automate manual

processes

Ability to transform/reengineer

existing processes

Depth of industry

expertise & experience

Service quality/

outstanding customer

experience

Continuous improvement methodology

Cost Existing relationship

with our organization

Financial stability

Global delivery scale

Flexible pricing models

Partnerships Reference clients


55



Selection criteria – Outcomes and ROI top all industry lists

RetailBFSI

— Ability to support business-outcome initiatives, as opposed to solely effort-based pricing: 17%

— Ability to transform/reengineer existing processes: 14%

— Ability to deliver timely return on investment: 11%

Manufacturing Healthcare and Life Sciences



— Ability to transform/re-engineer existing processes: 9%



— Service quality/outstanding customer experience: 12%


— Ability to automate manual processes: 15%






Energy and Utilities Other industries






— Depth of industry expertise and experience: 9%


56



Selection criteria – Small businesses are looking for expertise

<$1Bn

— Ability to deliver timely return on investment: 21%— Depth of industry expertise and experience: 21%— Service quality/outstanding customer experience:

18%

>$1Bn <$5Bn

— Ability to deliver timely return on investment: 24%— Ability to support business-outcome initiatives, as

opposed to solely effort-based pricing: 18%— Ability to automate manual processes: 10%

>$5Bn




VP and below



EMEA


opposed to solely effort-based pricing: 15%— Service quality/outstanding customer experience:

12%

SVP+


opposed to solely effort-based pricing: 17%— Ability to transform/reengineer existing processes:

11%



North America

Asia Pacific

— Ability to deliver timely return on investment: 16%— Ability to transform/reengineer existing processes:

16%— Ability to support business-outcome initiatives, as

opposed to solely effort-based pricing: 11%


57



Effectiveness of ITO and BPO – Still only a third think it has been very effective

How effective have your current ITO and BPO initiatives been for achieving the following business benefits to date?

36% 32% 30% 30% 28% 28% 27% 25% 24% 23% 22% 21%

53%47% 52% 48% 45% 50% 50% 47% 46% 52% 55%

45%

8%16% 13% 18% 22% 14% 16% 19% 23% 20% 18%

26%

3% 4% 4% 5% 6% 7% 7% 9% 7% 5% 5% 9%

Significantlylower operating

costs

Greaterflexibility to scale

operations

Access to newtechnologies

Betterstandardized

processes

Access tostrategic talentthat adds value

beyond standardoperations

Meetcompliance/regulatory

requirements

Access totactical talentthat keeps the

standardoperations

"ticking over"

Better cloud-based delivery of

services

Improvedanalytical

capabilities

Bettertransformed/redesignedprocesses

Better automatedprocesses

Better cognitiveprocesses

Very Effective Somewhat Effective Not Effective N/A


58



Suppliers more convinced of outsourcing’s cost savings and basic transformative impact than buyers and advisors

How effective have your current IT outsourcing and BPO initiatives been for achieving the following business benefits to date?


33% 27%

14%

22%17%

10%

29%

12%

15% 18%

12%

51%48%

26%

40%

12%

22%

37%

16%13%

24%

18%

36%32%

30% 30%28% 28% 27%

25% 24% 23% 22%

Significantly loweroperating costs

Greater flexibilityto scale

operations

Access to newtechnologies

Betterstandardized

processes

Access tostrategic talentthat adds value

beyond standardoperations

Meet compliance/regulatory

requirements

Access to tacticaltalent that keeps

the standardoperations

"ticking over"

Better cloud-based delivery of

services

Improvedanalytical

capabilities

Bettertransformed/reconfiguredprocesses

Better automatedprocesses


59



Larger organizations more convinced of outsourcing effectiveness

How effective have your current ITO and BPO initiatives been for achieving the following business benefits to date?


21%

22%

23%

24%

25%

27%

28%

28%

30%

30%

32%

36%

Better cognitive processes

Better automated processes

Better transformed/redesigned processes

Improved analytical capabilities

Better cloud-based delivery of services

Access to tactical talent that keeps the standard operations"ticking over"

Access to strategic talent that adds value beyond standardoperations

Meet compliance/regulatory requirements

Access to new technologies

Better standardized processes

Greater flexibility to scale operations

Significantly lower operating costs

Very Effective

10%

13%

18%

13%

15%

25%

23%

26%

23%

18%

28%

28%

22%

25%

25%

27%

26%

26%

28%

26%

31%

30%

31%

39%

23%

19%

24%

23%

26%

30%

29%

33%

32%

34%

36%

35%

>$5Bn >$1Bn <$5Bn <$1Bn

Company Size

60



27%

28%

28%

31%

30%

32%

35%

33%

37%

35%

35%

43%

16%

17%

19%

20%

19%

23%

23%

23%

23%

27%

30%

30%

VP and Below SVP+

Senior managers believe ITO and BPO have been very effective

How effective have your current IT outsourcing and BPO initiatives been for achieving the following business benefits to date?


Management layer

21%

22%

23%

24%

25%

27%

28%

28%

30%

30%

32%

36%

Better cognitive processes

Better automated processes

Better transformed/redesigned processes

Improved analytical capabilities

Better cloud-based delivery of services

Access to tactical talent that keeps the standard operations"ticking over"

Access to strategic talent that adds value beyond standardoperations

Meet compliance/regulatory requirements

Access to new technologies

Better standardized processes

Greater flexibility to scale operations

Significantly lower operating costs

Very Effective

61



Current provider: More senior managers believe providers are partners

How would you best describe your current primary service provider?


2%

8%

24%

25%

42%

Promises a lot, but constantly disappoints

Provides access to cheap labor, but not muchbeyond that

A true partner that proactively innovates and investswith you to find new thresholds of value to achieve

co-defined business outcomes

Efficient vehicle to drive out cost and improveefficiencies

A competent partner that provides access to skills,global scale, domain knowledge, and technology -provided you pay for it on a per headcount model

5%

23%

8%

28%

38%

2%

6%

27%

23%

42%

0%

6%

26%

26%

43%

>$5Bn >$1Bn <$5Bn <$1Bn

2%

3%

35%

17%

43%

1%

11%

15%

31%

41%

VP and Below SVP+

Company sizeManagement layer

62



The ideal provider: Large buyers want a true partner…smaller firms just want competence

How do you view the ideal role of your current primary provider in helping you advance your business into the future?


Company size

3%

3%

18%

30%

46%

Ideally, we would wouldn't use any externalproviders, we'd rely on automation and internal

staff

Provides access to cheap labor, but not muchbeyond that

An efficient vehicle to drive out labor costs andimprove efficiencies, but keeps out of your way

with initiatives like automation and digital

A competent resource partner that providesaccess to skills, global scale, domain knowledge,

and technology as and when you need it

A partner that proactively innovates and investswith you to find new thresholds of value, such asdigital transformation and automation to achieve

co-defined business outcomes

5%

5%

23%

43%

25%

3%

2%

17%

33%

45%

2%

4%

19%

20%

56%

>$5Bn >$1Bn <$5Bn <$1Bn

2%

1%

15%

30%

52%

3%

5%

21%

30%

42%

VP and Below SVP+

Management layer

63



TalentDo you agree that your organization and your primary service provider have the right talent to do the following?

23%

24%

26%

28%

29%

30%

30%

42%

40%

38%

47%

40%

42%

44%

28%

26%

26%

20%

27%

24%

23%

6%

9%

7%

3%

3%

4%

4%

2%

1%

2%

1%

1%

1%

0%

Increase scope or scale of outsourcing and sharedservices

Drive innovation into services

Address requirements of digital technologies

Manage internal operating costs

Improve quality of customer engagement

Manage productivity/operating efficiency

Contribute/align with corporate business strategies

Strongly Agree Agree Neutral Disagree Strongly Disagree

19%

19%

20%

20%

20%

21%

23%

36%

42%

41%

44%

42%

43%

43%

35%

32%

31%

29%

30%

29%

27%

7%

6%

6%

6%

6%

6%

7%

2%

1%

2%

1%

2%

2%

0%

Contribute/align with corporate business strategies

Improve quality of customer engagement

Manage internal operating costs

Manage productivity/operating efficiency

Drive innovation into services

Address requirements of digital technologies

Increase scope or scale of outsourcing and sharedservices

Strongly Agree Agree Neutral Disagree Strongly Disagree

Internal talent Provider talent


64



Talent – Top skillsWhat are your top 3 requirements for to-be-hired operations staff? Which skills are the hardest to find?

Top 3 Hardest to find


3%

4%

6%

6%

5%

6%

11%

16%

18%

25%

4%

5%

7%

11%

12%

11%

12%

12%

14%

13%

7%

8%

10%

9%

13%

16%

11%

10%

9%

8%

14%

16%

22%

26%

31%

33%

35%

39%

41%

45%

Negotiation

Service orientation

Cognitive flexibility

Coordinating with others

Emotional intelligence

Judgement and decision making

People management

Creativity

Critical thinking

Complex problem solving

Number 1 Number 2 Number 3

1%3%

4%

4%

4%

8%

9%

25%

18%

23%

2%

6%

6%

6%

11%

13%

16%

10%

13%

19%

4%

7%

6%

9%

13%

13%

14%

8%

15%

11%

6%

17%

17%

19%

28%

34%

39%

43%

45%

53%

Negotiation

Emotional intelligence

Cognitive flexibility

Service orientation

Coordinating with others

Judgement and decision making

People management

Complex problem solving

Creativity

Critical thinking

Number 1 Number 2 Number 3

65



About the survey – Total responsesWhich of the following best describes your organization?

HfS Research in conjunction with KPMG, State of Business Operations 2017 N=829 Enterprise Buyers, Service Providers and Advisor/Consultants

Enterprise (client of services/outsourcing/

shared services) (n=454; 55%)

Provider of IT/BPO services (n=265; 32%)

Advisor/Consultant/

Analyst(n = 110; 13%)

66



About the survey – IndustryPlease specify your company's industry


Other

Public Sector

Diversified

Trans and Logistics

Entertainment

Banking

InsuranceCapital Markets

Manufacturing

CPG

Healthcare

Pharma, Life

Sciences

Utilities and Telecom

Energy, Oil, and Gas

Retail and Hospitability


Other Industries BFSI Manufacturing Healthcare and Life Sciences

Retail

Software and High TechEnergy and Utilities

BFSI Manufacturing Energy and Utilities Healthcare and Life Sciences Retail Software and High Tech Other Industries

13 %

4% 3%

7% 5 %

5 %3 %3 %

12%

4%

8 % 4 % 10 %

10 %5 % 5 %

67



About the survey – Company sizeWhat are your company's annual revenues? (in U.S. dollars)


Between $1B and $5B Between $5B and $10B Greater than $10B

Less than $500M

>$1Bn <$5Bn <$5Bn <$1Bn

Non-Profit

Between $500M and

$1B

>$1Bn <$5Bn <$5Bn <$1Bn

47% 18 % 18 % 12 %3 % 3 %

68



About the survey – Which job title best describes your role?


Director

Vice President Manager

Other (please specify)CEO, C-Level, or Executive Vice President

Senior Vice President, Function Head

VP and Below SVP+

SVP+ VP and Below

28% 13% 12% 24% 17%

7%

69



About the survey – Where are you located?


North America

Asia Western Europe (excluding U.K.)

Eastern Europe

United Kingdom

Latin America

Australia, New Zealand, or Pacific Islands

North America Asia Pacific EMEA

AfricaMiddle East

Other

North America Asia Pacific EMEA Other

44% 24%

9%

9%

5 %

1% 1%

5%2%

70



Contact us

Jamie SnowdonChief Data OfficerHfS [email protected]

Phil FershtChief Executive Officer and Chief AnalystHfS [email protected]

David J. BrownPartner, Global Head of Shared Services and Outsourcing AdvisoryKPMG [email protected]

Stan LepeakHead, Global Research and Thought Leadership, Management ConsultingKPMG [email protected]

mailto:[email protected]




71




© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 646189

The KPMG name and logo are registered trademarks or trademarks of KPMG International.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

7272

KPMG Shared Services and Outsourcing AdvisoryWho

we areKPMG helps clients transform

business services to

We bring a specialized global team of more than 1,100 professionals who blend insight and operational talent to help our client design, build and manage multi-functional business processes.

We focus on strategies that you can

implement.

1,100+professionals

improve value, increase agility and

create sustainable performance.

We put the strategy within the context of

practical execution.

As a leading firm in

transformative service delivery model strategy, KPMG helps clients leverage alternative delivery models to improve value, increase agility, and create sustainable performance.

What we do

We help clients align a business services model with an emphasis on common

ENTERPRISE DELIVERY PLATFORM.

processes, technology and services on an

Alternative service delivery models can represent atransformational journeyin business services. While there are common design principles, there is no ‘one size fits all’ model and must

be designed to align and enable company specific priorities.

© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

7373

KPMG Shared Services and Outsourcing AdvisoryHow

we do itWe have a proven methodology

WhyKPMG

covers all angles of the service delivery model life cycle including

that

Change ManagementIT,Governance,Risk & Compliance.

We apply focused research, automation tools, proprietary data, clear business acumen,and a mindset to get quickly to what matters in providing

Transition strategy

Location analysis

Governance organizationdesign

Service delivery model guide

Target operating model framework

Process maturity assessment

objective, actionable and

practical answers to clients.

Independence:Solution agnostic, we apply market knowledge and unbiased objective advice to help clients

In our increasingly complex world, firms find that taking a holistic view across their internal support functions can yield the greatest return.

Proven track record:

Transforming these functions requires the precision and expertise of a market place leader.

For over 100 years, organizations around the world have

trusted KPMG for our business advice.

Trusted partner:

KPMG continues it’s ongoing relationship with HfS Research, a leading research organization in the field of digital labor.

Research-based methodology:

The combination of two leading digital laborfirms covers the spectrum of robotic process automation through ground-breaking

cognitive automation.

74



HfS Research is The Services Research Company™—the leading analyst authority and global community for business operations and IT services. The firm helps organizations validate and improve their global operations with world-class research, benchmarking and peer networking. HfS Research was named "Independent Analyst Firm of the Year for 2016" by the Institute of Industry Analyst Relations which voted on 170 other leading analysts. HfS Chief Analyst, Phil Fersht, was named Analyst of the Year in 2016 for the third time.

HfS coined the terms "The As-a-Service Economy" and "OneOffice™", which describe HfS Research's vision for the future of global operations and the impact of cognitive automation and digital technologies. HfS' vision is centered on creating the digital customer experience and an intelligent, single office to enable and support it. HfS’ core mission is about helping clients achieve an integrated support operation that has the digital prowess to enable its organization to meet customer demand - as and when that demand happens. With specific practice areas focused on the Digitization of business processes and Design Thinking, Intelligent Automation and Outsourcing, HfS analysts apply industry knowledge in healthcare, life sciences, retail, manufacturing, energy, utilities, telecommunications and financial services to form a real viewpoint of the future of business operations.

HfS facilitates a thriving and dynamic global community which contributes to its research and stages several OneOffice™ Summits each year, bringing together senior service buyers, advisors, providers and technology suppliers in an intimate forum to develop collective recommendations for the industry and add depth to the firm’s research publications and analyst offerings.

Now in its tenth year of publication, HfS Research’s acclaimed blog Horses for Sources is the most widely read and trusted destination for unfettered collective insight, research and open debate about sourcing industry issues and developments.

HfS was named Analyst Firm of the Year for 2016, alongside Gartner and Forrester, by leading analyst observer InfluencerRelations.

http://www.hfsresearch.com/

http://analystrelations.org/2016/12/06/winners-announced-iiar-analyst-of-the-year-2016/

http://www.horsesforsources.com/four-foundations-as-a-service-1_052315

http://www.hfsresearch.com/pointsofview/Defining-the-Digital-OneOffice-Organization

http://www.hfsevents.com/

http://www.horsesforsources.com/

http://www.influencerrelations.com/4132