Smart Strategies to rate 10 top outsourcing service providers -2016

Updated on :January 31, 2025

Synopsis: I have earlier written a blog on outsourcing and today took up talking about top 10 outsourcing companies that rule the roost and the reasons. Everest Group head quartered at Dallas is an outsourcing consultancy and research firm which globally monitors and motivates service providers of the sourcing industry with befitting rewards and ranks. The year 2016 have them crown Accenture as the leader for its commendable efforts to transform itself to market trends. It declared IBM, Cognizant, and Accenture as the three top outsource providers. HCL was subsequently labelled as ‘Star performer’ because of its efforts to adopt innovative service models.

In the IT service providers the pick was for Cognizant (Teaneck, N.J. based) who is also India’s second largest outsourcing provider, topping the list, followed by Big Blue and Accenture.

 CIO: who honoured these companies, are seriously inclined to win customers and drive revenue throughout the year. Interestingly, based on performance Everest also ranks individual service providers in as many as 26 different categories before rating  them as leaders, major contenders, star performers, or even aspirants in respective areas in context with key business lines, geographies and technologies. Year 2016 has been an exceptional year for the Group because they came up with accumulated information gathered to offer overall rankings for global outsourcing industry. With concerted focus on hyper-speed deal making, new multi-sourcing headaches, man-machine collaboration and potential cures, experts expect more of shifts in the industry. Cognizant at numero uno was a big surprise for many but thanks to consolidation and analysis of data it paved the position due to its consistent year on year growth. It was therefore no surprise that Cognizant had enjoyed star performer ratings for five consecutive years. India’s TCS and Wipro were also amongst the top five.

The method by which IT service providers are chosen and ranked by giving score to the model is Everest takes into consideration both market success and IT service capabilities. However, market success is analysed on the basis of revenue growth, deals won or renewed, margins generated etc. Incidentally, 2016 gave more emphasis on recalibrating methodology and focused on giving emphasis on intellectual property, innovation and capabilities of technology. Now a days lot of emphasis is placed on scale that is, number of employees, scope of coverage, geographic footprints while evaluating development capabilities which in recent years have become too commoditized.  It is also a fact that lot of differentiation enterprises are more focused on innovation side. Hence the curiosity to peek into what these service providers are investing in, how they devise their sourcing strategies, whether experimenting with their customers with new service models or engagements is always anticipated.

The top 10 IT Service Providers for 2016 can be listed as:

1. Cognizant Headquartered in Teaneck, New Jersey (U.S.) combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, global, collaborative workforce that embodies future work. Cognizant is a member of the NASDAQ-100, S&P 500, Forbes Global 2000 and Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Its consistent long term market standing and supporting narrow economic rating, its client-first attitude has been contributing to their top position in the IT fraternity. It has been ranked 19th in the Business Week 50, the magazine's annual listing of “star performers” across the 10 sectors. It concentrates mostly on U.S. and European clients and a handful of industries with just three core services viz. software programming, business process outsourcing and managing computer equipment. Cognizant had a dominant presence in the 2016 honours claiming  No.1 spot in the ITS Top 20 list as well as being named “Star Performer” in the HLS segment, sharing “Leader of the Year” honours in the HLS with Accenture, and sharing “Leader of the Year” honours in the BFSI segments with Accenture and Tata Consultancy Services.

2. Accenture was a highlighted leader (although at No. 2 rank) till now, because it experienced total transformation. Its management consulting engagements were result of outsourcing opportunities. This was because they could connect with key stake holder and get invited to the table for transformational deal for more than a decade. The firm is also ambitiously expanding from consulting legacy to integrated infrastructure model and product solutions, allowing them to have deals that were only in the purview of business process providers. Accenture is world’s largest consulting firm by revenue is incorporated in Dublin, Ireland, since Sept., 2009 is a Fortune Global 500 company listed.

3. IBM International Business Machines Corporation at a rank of No. 3 has been subject to industry brick-bats since they diverted from 80s total outsourcing to 90s platform solutions off-shoring and beyond. IBM has remained firm and relevant even though EDS and Perot systems (fell wayside + acquired). Be it cloud or digital transformation they defined paradigms as no one can beat the kinds of investments IBM made. IBM is obviously getting challenged by likes of Amazon and Rack space as powerful upstarts. IBM is always game for new technology.

However, it was seen that TCS and Wipro did extremely well in the banking and financial services surmounting to nearly half of their revenues. However, Cognizant superseded on them in the areas of healthcare and life sciences only because of increased coverage. IBM is an American multinational technology and consulting corporation, with corporate headquarters in Armonk, New York. IBM manufactures and markets computer hardware, middleware and software and offers infrastructure, hosting and consulting services in areas ranging from mainframe computers to nanotechnology.

4.Tata Consultancy Services Limited-TCS is an Indian multinational information technology (IT) service, consulting and business solutions company headquartered in Mumbai, Maharashtra. It is a subsidiary of the Tata Group and operates in 46 countries. Is one of the largest Indian companies by market capitalization ($80 billion) Considered as ervices brands worldwide and ranked as 64th in Forbes as World's Most Innovative Companies in IT services. Is also world's 10th largest IT service provider in terms of revenues.TCS is also rated as the world's most powerful brand in IT Services by providing clarity to marketers, brand owners, customer services, customer satisfaction, business solutions, offering best Engineering and R&D services globally. Further Forbes has ranked it as World’s Most Innovative Companies. “Leader of the Year” honours in the BFSI segments with Accenture and Tata Consultancy Services.

5. Wipro headquartered in Bangalore, Karnataka, India has expertise in doing business by leveraging industry-wide experience, deep technology expertise, comprehensive portfolio of services and vertically aligned business model. Wipro’s 55+ dedicated emerging technologies ‘Centres of Excellence’ enable the company to harness the latest technology for delivering business capability to clients. Wipro is globally recognized for its innovative approach towards delivering business value and its commitment to sustainability. Wipro champions optimized utilization of natural resources, capital and talent. Wipro is a trusted partner of choice for global businesses looking to ‘differentiate at the front’ and ‘standardize at the core’ through technology interventions.

6. HCL Technologies Limited is a multinational IT services company, headquartered in Noida, Uttar Pradesh, India. It is a subsidiary of HCL Enterprise. Originally a research and development division of HCL emerged as an independent company in 1991 when HCL ventured into the software services business. HCL Technologies (an acronym for Hindustan Computers Limited) offers services including IT consulting, enterprise transformation, remote infrastructure management, engineering and R&D, and business process outsourcing (BPO). HCL is coveted as “star performer” for 2016. HCL offers deals in the infrastructure services which were normally handled by IBM or HP exclusively. IBM Indian Unit is supposed to have very aggressive sales forces in the industry. In-spite of being a remote infrastructure provider HCL still deals on assets very willingly (on long term basis) by building solid pipeline. How effectively these agreements are performed has to be gauged. As is the fact, that winning a deal is easier but having quality deals to attend is a real challenge. So whether the quality is compromised or something very genuine is brought on the table is yet to be analysed.  IBM and HP Enterprise topped in the cloud and infrastructure space because of its innovative and pedigree capabilities only because of keen investing efforts to excel. I found this blog extremely informative as to why HP and IBM are rated top IT outsourcing service providers.  

7. Dell Inc. is an American privately owned multinational computer technology company based in Round Rock, Texas, U.S. develops, sells, repairs, and supports computers related products and services. The company is named after its founder, Michael Dell. The company is one of the largest technological corporations in the world and is well known for its innovations in supply chain management and electronic commerce, specially its direct-sales model, "build-to-order" or "configure to order" approach to manufacturing/delivering individual PCs configured to customer specifications. Dell was a pure hardware vendor for much of its existence, with the acquisition in 2009 of Perot Systems, Dell entered the market for IT services. The company has since made additional acquisitions in storage and networking systems, with the aim of expanding their portfolio from offering computers only to delivering complete solutions for enterprise customers.

8. Infosys Limited (formerly Infosys Technologies Limited) is an Indian multinational corporation that provides business consulting, information technology and outsourcing services. It is headquartered in Bangalore, Karnataka. Infosys is the second-largest Indian IT services company by 2016 revenues, and the fifth largest employer of H-1B visa professionals in the United States in FY 2013.

9. CapGemini+IGATE IGATE is an IT services company, headquartered in Bridgewater, New Jersey. The firm operates in North America, Asia, Europe, Japan and Australia, providing technology consultancy and services. The firm has over 70 offices and customer delivery centres in North America, Europe, Asia and Australia. In 2015 French IT services group Capgemini unveiled a deal to acquire IGATE in a $4bn deal. Subsequently in 2011, IGATE acquired Patni Computer Systems–a company three times its size. With a value of around a billion US dollars, this acquisition was the largest cross-border leveraged transaction in the IT sector.

10. Computer Sciences Corporation (CSC) is an American multinational corporation that provides IT services and professional services. Its headquarters are located in Falls Church, Virginia spread over 60 countries. Its clients include commercial enterprises and the U.S. federal government, as well as state, local and non-U.S. government agencies. In September 2009, when Xerox acquired Affiliated Computer Services, CSC became the only remaining major "hardware vendor independent" IT service provider with headquarters and major operations in the U.S. CSC has been a Fortune 500 company and also figures in the Forbes Global 2000 list. On May 24, 2016, CSC announced that it will merge with Hewlett Packard Enterprise's Enterprise Services division to create a new pure-play IT Services Company.

This graph indicates Global Market Size of outsourced services from 2000-2015 (in billion US dollars) (source www.statista.com)

This graph indicates High-end enterprises focused on cost,Mid-Market focused on solutions.(source www.horsesforsources.com)

Security takes center stage in service providers menu because:

- Security is top of mind

- from the boardroom to the break room,

- great influence on outsourcing strategy in 2016

- security risk poised to increase telematics and the Internet of Things (IoT)

- becoming more prevalent in consumer and commercial products

- Regulators will determine large fines for poor security

- Will address the concern in better ways as service providers have weak links.

- Optimism for rise of Chief Security Officer + more enterprises+ more vendors for better protection of data irrespective of its location.

Objectives:

Offshore captives come back – reduce cost, increase flexibility, getting smarter about in sourcing.

Production workloads—and more—hit the cloud – more of CIOs experiment with big public cloud options – Microsoft Azure and Google Cloud Platform.

VMOs go mainstream – Vendor Management Office will provide a high-level, enterprise-wide view and subsequently managing day-to-day operational details as well as multiple touch points between different providers in the service delivery chain.

Integration challenges surge - shortage of employees capable of managing multiple emerging technology platforms will be left with no option but to outsource service integration, incident management and change management. Hence increasing partnerships amongst providers is predicted by industry experts. The service providers universe expands will allow customers buy from expanding list of technology providers, continue with ITO, BPO and cloud service providers in becoming digital businesses who blazed digital trial with growing managed services capabilities.

Multi-speed IT hits outsourcing - whether “bimodal IT” or “two speed” clients are at a choice to recognize and take different approaches to managing “run the business” part of IT and the “change the business” in 2016. Clients are also expected to adopt bi-modal approach to implement commercial and contractual mechanisms with vendors for more business.

Vendors get soft(er) will have to do away with old concept of customer approach (which was one sided) low price strategy to deep market penetration into the core functions or big companies/corporate with an accommodative approach in line with their needs.

Automation will redefine relationships - ITO and BPO are diverting to machines as they have exhausted opportunities to move work to lower-cost people making contractual buyers to adjust and adopt this strategy. As this has integrated more robotic process automation (RPA) into IT service industry.

Agile sourcing emerges - have allowed companies to decide on digital strategy to execute much faster in 2016 (result of avoiding seeing technology shift or a competitor jumping ahead) with increasing number of clients deploying substantial negotiating teams working on an agile basis to close deals smartly and faster.


Conclusion:

Outsourcing decision making is certainly going to speed up due to technology advance on dime. However will like to conclude this blog with a major issue of two major errors that companies make in outsourcing services.

- Companies rush to send back-office work overseas which is known as cross-border business process outsourcing (BPO). Most companies from the West are exploring overseas shores to buy services right from customer contact services to call centres to complex financial analyses. Measuring results is the toughest challenge in outsourcing work to an overseas BPO. Analysing the effectiveness of BPO relationships and sidestepping risky pitfalls is however based on field research.

- The second major problem is the Law of Thermodynamics stating that entropy being a closed system can never decrease even if stated by CFOs and COOs. The reason being that disorder and entropy being an unmeasured unmonitored system will always be on an increase. Almost all decisions that are made in BPOs are related to problem of measurement.

If the above two are handled and managed there is no reason why outsourcing services should not boom the industry of service providers to a revenue generating bombshells. Share this if you found it informative and interesting!!!

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