TBR Global Delivery Market Landscape webinar slides

TBR

T EC H N O LO G Y B U S I N ES S R ES EAR C H , I N C .

PROFESSIONAL SERVICES PRACTICESM

Following the Sun in 2012: TBR’s Global Delivery Market Landscape Report

WEBINAR

Liz Leonard ([email protected]), Professional Services Practice Senior Analyst

mailto:[email protected]

IT Services Global Delivery Market Landscape Webinar

TBR

©2012 Technology Business Research Inc. 2

Liz Leonard Senior Analyst [email protected] Twitter @RElaunchLiz

Ramunas Svarcas Senior Analyst [email protected] Twitter @rjstbr




TBR

©2012 Technology Business Research Inc.

TBR’s Global Delivery Landscape provides insights into key resource management strategies

Global Delivery Market Drivers

In what areas are vendors expanding, investing to grow?

Investments

How are the leading IT vendors utilizing onshore and low-cost resources?

Offshore Strategy

What strategies are being leveraged to manage productivity? How will tools and automation decouple revenue from headcount?

Efficiency

Key Areas Covered and Questions Answered

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Leading IT services vendors balance resource strategies against opportunities

Vendors currently included in the study are:

Following the Sun in 2012: Approach and Vendors

The output of this study includes:

• Executive summary comparing measurable outcomes and vendor strategies

• 12 in-depth profiles on each benchmark vendor

• Analyst knowledge transfer

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Vendor market segments capitalize on different attributes

Cross-selling,

Location Leverage,

Shift to Higher-value Consulting

• IBM Global Services (IBM GS) • Dell Services • HP Services

• Accenture • Capgemini • CSC • Xerox

• Cognizant • TCS • HCLT • Infosys • Wipro

Global

Delivery

Vendors

Global Delivery Market: Vendor Segments Summary

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Global Delivery Market Key Findings

Despite attempts to decouple revenue growth from headcount, vendors’ headcount expansion continues at a rapid pace

• Total headcount for the 12 vendors covered in the study grew 12.2% year-to-year.

• Low-cost resources grew 16.3% year-to-year.

• Onshore resources grew 5.8% year-to-year. • IT services vendors are staffing to meet

growing cloud demand.

TBR methodology: The headcount and data found in TBR’s Global Delivery Market Landscape report are TBR estimates based on our longstanding vendor coverage and proven modeling methodology. While individual vendors provide some discrete pieces of headcount data publicly, the majority of vendor data points are solely TBR estimates and have not been explicitly provided by or approved by vendors referred to in this report.

Global Delivery Headcount Growth

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Global Delivery Market Key Findings

Staffing composition and growth rates differ by vendor segment

• SIs with support and maintenance large staff, moderate growth • Pure SIs balancing their growth across onshore and lower cost • YTY headcount growth highest among India-centric vendors

Global Delivery Headcount Growth per Vendor

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IT Services continues to grow headcount in tandem with revenue


Benchmark vendors expanded consulting (C&SI) headcount and increased the volume of onshore hires for client-facing service delivery.

Higher-value Service Offerings

Opportunities for low-cost resources and service locations are increasingly balanced with higher-cost, onshore, client-facing resources.

Balancing Location Costs, Resources

Investments in automation and integrated industrialized methods improved vendors’ efficiencies through standardization, driving profitability.

Efficiencies are Paramount

Key Market Drivers: Service Offerings, Resource Composition and Efficient Delivery

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More vendors are growing their Consulting and SI headcount

Global Delivery Market Drivers: Higher Value

Benchmark vendors expanded consulting (C&SI) headcount and increased the volume of onshore hires for client-facing service delivery.

Higher-value Service Offerings

2010 Revenue per Employee 2010 Revenue per Employee 2010 Revenue per Employee Positive Growth

2011 Revenue per Employee 2011 Revenue per Employee 2011 Revenue per Employee Negative Growth

For C&SI, higher-value offerings based on asset use are improving revenue per employee.

Higher-value Offerings

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Leading service vendors align portfolio to priority business issues

Tactics to Capture

Opportunity

Vertical

Analytics & BI

• Sector specialties • Functional

approach

Cloud

•Offerings expanding •Vertical-

market potential

Mobility

• Technology transformation •Operational

excellence

Business Issues of Focus

Global Delivery Market Drivers: Higher Value

Higher-value Offerings

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IT vendors are balancing low-cost leverage with client-facing opportunities

Opportunities for low-cost resources and service locations are increasingly balanced with higher-cost, onshore, client-facing resources.

Balancing Location Costs, Resources

Global Delivery Market Drivers: Balanced Resource Composition

Regional Resource Composition

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“Best shore” strategies are essential if vendors are to compete

Key Geo Insights

• Americas Low-cost as % of Global Headcount: 6.4%

• EMEA Low-cost as a % of Global Headcount: 3.6%

• APAC Low-cost as a % of Global Headcount: 53%

Americas Total Headcount: 487, 400

% of Global Headcount: 26.9%

Global Delivery Market Drivers: Balanced Resource Composition

EMEA Total Headcount: 323,000


APAC Total Headcount: 1,003,900


Global Delivery Headcount by Region

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IT vendors are increasing service delivery sophistication

Investments in automation and integrated industrialized methods improved vendors’ efficiencies through standardization, driving profitability.

Efficiencies are Paramount • Industrialization, standardization, automation, and

high-value offerings provide profit benefits for more sophisticated vendors (i.e., IBM, Accenture).

• Efficiencies within communication platforms and transition methods drove multilocation teams’ success and enabled reach to global clientele.

• SI vendors are balancing low-cost leverage with high-value services mix and increasing emphasis on industrialized delivery models to support their operating-margin expansion.

Global Delivery Market Drivers: Efficient Delivery

Efficient Delivery Methods

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IT vendors continue to invest in headcount and delivery efficiency sophistication, driving down utilization rates

Global Delivery Market Drivers: Efficient Delivery

• Efficiency metrics indicate there is room for improvement.

• Overall utilization declined from 82.3% to 81.6%, as vendors are building staffs in anticipation of demand.

Key Efficiency Metric: Utilization

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Vendors are opportunistic with investments, developing professional services offerings that align with clients’ highest priorities

How are IT vendors meeting demand?

Higher-value Services

Balancing Resource Composition

Investing for Efficiency

Global Delivery Landscape Trends

Listening and delivering

to the ever-growing

inventory of client needs

Reacting to changing

economic climate to

provide the highest-

value services

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TBR’s Global Delivery Landscape includes profiles for 12 vendors with key competitive metrics

Example Vendor Profile: Key Competitive Metrics

Year-to-Year headcount composition changes

Quarterly view of efficiency changes

Connection of lower-cost resources to profits

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Profiles - Accenture

Trend Onshore Utilization Trend Low-cost Utilization

Trend Onshore Attrition Trend Low-cost Attrition

Example Vendor Appendix: Vendor Dashboard CSC

KEY: 4Q11 vs. 4Q10 Improvement Deterioration No change

SOU

RC

E: T

BR

EST

IMA

TES

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TBR’s Global Delivery Landscape provides insights into key resource management strategies


In what areas are vendors expanding, investing to grow?

Investments

How are the leading IT vendors utilizing onshore and low-cost resources?

Offshore Strategy

What strategies are being leveraged to manage productivity? How will tools and automation decouple revenue from headcount?

Efficiency

Key Areas Covered and Questions Answered

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Questions

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©2012 Technology Business Research Inc. 20

Key Areas Covered Key Questions Answered:

Offshore Strategy • How are the leading IT vendors utilizing offshore and nearshore resources?

• How do offshore delivery models support revenue growth and profitability objectives (i.e., are the vendors with the largest offshore footprint delivering the highest margins)?

Investments

• What investments are vendors making (i.e., training, tools and automation, acquisitions, etc.)?

• How will tools and automation create non-linear headcount models (i.e., revenue growing faster than headcount)?

Efficiency • What strategies are being leveraged to manage attrition?

• What strategies are vendors leveraging for managing offshore utilization and maximization of bench resources?

Future Outlook

• What is the hiring forecast for offshore and nearshore resources?

• What will be the areas of challenge (i.e. geography, skills, etc.)?

• What trends are emerging in offshore strategy (i.e., consolidation of country-based infrastructure and resources)?

For additional information please contact:

Liz Leonard, Professional Services Practice Senior Analyst

[email protected]

James McIlroy, Sales Director

[email protected]




TBR


Definitions and Report Overview

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TBR Global Delivery Market Landscape Terminology & Definitions Onshore headcount: Billable and non-billable headcount located in onshore locations Low-cost: Billable and non-billable headcount located in offshore and nearshore locations Consulting & Systems Integration (C&SI):

Business Consulting: Advisory services such as strategy consulting, M&A, process improvements, change management, capacity planning and operations assessments, etc.

IT Consulting: Advisory services around information technology (example: evaluating help desk), applications portfolio optimization, package (SAP, Oracle) consulting and IT governance consulting, SETA (systems engineering & technical assistance)

Systems Integration: Process that includes planning, design, implementation and project management of a solution; it may involve systems and custom apps development as well as integration of enterprise packaged software (SAP, Oracle, Siebel, etc.).

Business Process Outsourcing (BPO): BPO involves the transfer of management and execution of one or more complete business processes or entire business functions to an external service provider. Can be segmented into HR, F&A, SCM, CRM/ customer care, etc.

Applications Outsourcing (AO): Includes support and maintenance of enterprise applications Information Technology Outsourcing (ITO): Server, network, desktop outsourcing either onsite or remote, cloud

computing, remote infrastructure management (RIM), security, compliance and continuity; can be segmented into server/datacenter, network desktop, disaster recovery, etc.

Other, i.e. Support & Maintenance: Revenue that is directly associated with hardware support (usually for providers like Dell, HP, etc.); includes telephone support, remote diagnostics, electronic support, on-site support, predictive preventive maintenance, parts repair and asset management services (HW/ servers, PCs, PDAs, storage, printers and peripherals)

Utilization: Reported or estimated percentage of hours a company’s billable resources spend on billable engagements relative to a standard based of potentially billable hours

Attrition: Reported or estimated percentage of a company’s services employees that leave voluntarily, reported on annualized basis, irrespective of geography or service line, and excluding trainees

Terminology & Definitions

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TBR’s Global Delivery Market Landscape provides resource analysis by region and service line

Global Delivery Market Landscape Overview

Vendors Market Segments Service Lines Regions Key Metrics Time Period

• Accenture • Capgemini • Cognizant • CSC • Dell Services • HCLT • HP Services • Infosys • IBM Global Services • TCS • Wipro • Xerox

• Systems Integrators with Support & Maintenance

• Systems Integrators • India-centric

Providers

• AO • ITO • BPO • Consulting &

Systems Integration (C&SI)

• Americas • APAC • EMEA

• Headcount Total • Headcount by

service line (AO, ITO, BPO, C&SI)*

• Headcount by Geo* • Attrition* • Utilization* • Low cost as percent • Operating Margin • Revenue Growth vs.

Headcount Growth

• Current report includes data for: o 4Q10 o 1Q11 o 2Q11 o 3Q11 o 4Q11

• TBR’s Global Delivery Landscape and Benchmark is a semiannual research program providing insights into offshore leverage strategies, efficiency comparisons, investments and assessments across 12 leading IT services firms. The results for this study are indicative of only the vendors included, and investments and performance of non-covered vendors may vary from the findings.

• Deliverables include:

o Executive Summary & Report

o 12 Individual firm profiles

Global Delivery Market Landscape Coverage

*Onshore and low cost broken out for each

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