Predictions for IT services in 2015

IBA Group
Mark Hillary

The industry analyst Gartner recently published their predictions for technology in 2015. It’s an eclectic list that includes such announcements as 90% of consumer product companies using 3D printing for personalised products and digital disruptions being created by algorithms.

Of course every analyst and pundit is making their predictions now and so if I am going to add to this end of year commentary then I would suggest the following for IT services.

I can see four broad areas where technology products and services will boom in the next year or two:

    Health; particularly remote access to doctors, and wearable monitoring technologies. Health care technology is advancing so rapidly that we will see average life expectancy rates rapidly increase in the next decade.

    War; the world is becoming more unstable and cyber crime (such as the recent Sony hacking) is becoming an issue of national security. War will increasingly rely on technology as much as soldiers and missiles.

    Privacy; since the Edward Snowden revelations, people have become more concerned about their own privacy and the use of their personal data by corporations and government. This will create issues for industries such as advertising and yet create new opportunities for those who can help to preserve anonymity or confidentiality.

    Government; consumers have a greater expectation on their governments, both as democratic legislators and as providers of public services. Both will be dramatically changed through the use of technology with services improving and greater access to information.

    The traditional market for IT services has already changed from what we saw in the past decade. I visited IBA recently and learned how some of their projects are more valuable after deployment because they can then capture and utilise user or customer data – the real value is in the data not the fee for building the system.

    Based on what we have seen recently I believe there will be three major factors that continue to exert major pressure for change on how IT services are delivered:

    Contract flexibility; the old days of very tight SLAs and KPIs have to end because the world moves just too fast for service partners to be relying on measures that might have been designed a couple of years earlier. This is particularly important in industries that are changing month by month – customer service technology for example. IT service companies have talked for years about being ‘partners’ – now they need to truly design contracts that reflect this partnership model because tight contracts are too restrictive for the modern world.

    The app store model will continue to develop in the enterprise. Consumers are used to using apps and IT service companies need to consider how services can be bundled into the same kind of structure for the enterprise.

    The cloud will continue to dominate areas such as storage, but with complex services such as ERP and CRM all available via cloud based tools, is there anything that cannot be delivered this way? We will see every possible option explored soon.

    I think these are the three main drivers within the IT service space at present. Earlier ideas about IT outsourcing being cost-driven and with many concerns about the development location feel dated now. Nobody cares that Skype was developed in Estonia, Angry Birds was developed in Finland, Tweetdeck was developed in London, and Waze was developed in Israel.

    More broadly, as Gartner suggests, we will feel the impact of technology far more on our daily lives whether we are involved in the technology industry or not. Think of many normal activities; choosing a political leader, finding the best price for a new car, finding a new partner, studying for a new degree, reading the news, almost every activity we undertake now engages us in technology. Almost everyone is a technology user and this penetration into every part of society means that for those of us who do work with technology, there is a bright future – every other industry depends completely on technology today.

    Have a great holiday season and enjoy the start of 2015. There will be more comment on the blog in the New Year!

Reshoring

IBA Group
Mark Hillary

The calls for companies to explore reshoring keep getting louder, led largely by a new sense of nationalism in Europe that was on show during the recent European elections. Many voters are rejecting internationalism in favour of wanting to see more business done close to home.
There has also been a change in the cost of doing business in Europe. In fact, the FT reports that the UK is now the cheapest manufacturing location in all of Western Europe.

But in all the reports about reshoring becoming something of a trend, the focus is always on manufacturing, not the IT or IT service market. Intellectual services appear to be purchased from the best possible location and the talk of reshoring this year has not changed this.
The way IT services are purchased is certainly changing. The concept of an app store being taken from the consumer market and applied to enterprise systems is becoming a reality and cloud-based computing power on demand is becoming normal.

These differences in the way that IT projects are planned and delivered will ensure that customers continue buying from the best global location for their own needs. With most technology projects today the emphasis is on the required skills – if you can’t find them nearby then it’s only natural to look overseas and hi-tech services operate on a global platform.

So it is true that Panasonic is thinking about moving manufacturing back to Japan, and Otis moved their elevator production from Mexico back to the USA, but in IT development it looks like the future will remain global – bits and bytes can be delivered online unlike cars, DVD players, or elevators.

South Africa to rival Eastern Europe in outsourcing?

IBA Group

Mark Kobayashi-Hillary

I was down in Cape Town, South Africa, last week. This is a market that was very strong about five years ago – they really were the place that everyone was exploring for European call centres, but then for some reason they went off the radar.

That was partly through a combination of the government reviewing how much money they spend on promoting the region, and a dearth of really good local players that could promote their offering without government money. But regardless of what happened then, it seems they are back with a bang.

South Africa is positioning itself, once again, as a key player in the BPO market with a focus on customer service, but this time exploring new areas that are different to more traditional outsourcing – social media support and agents that are working entirely off-script, with autonomy to just do what is needed to keep the customer happy.

You might ask what this has to do with Central and Eastern Europe, the general focus of this blog?

The key target for the South Africans is directly to their north, Europe. They are on the same time zone as continental Europe, and have a strong cultural and business affinity with several western European countries. They also use English as standard for education, so kids grow up using English, but other European languages are not hard to find.

So if they re-emerge from the shadows and start winning a number of BPO and IT deals that support business processes in Western Europe, it will remind many that they are still around. Some big names, such as Amazon, have shifted German and British customer support down to South Africa only recently when this might have been expected to stay in the CEE region.

It looks like the football world cup in 2010 has woken the business community to the opportunities in South Africa and the CEE customer service players are going to have to fight a little bit harder to compete.

Nasscom report from India

IBA Group

Mark Kobayashi-Hillary

Another Nasscom conference is over. This annual event in Mumbai, India, has grown into the largest and possibly most important outsourcing event in the world, with over 35 countries represented and promoted – much more than just an India-only event.

 There were several formal presentations representing the advantages of a number of different world regions. These included: Colombia, Poland, Germany, UK, South Africa, MENA (Middle-East and North Africa), and Africa in general.

The conference was organised some time ago, so it was interesting to see how the political changes in the news were affecting presentations that were supposed to be only positive. The MENA presentations in particular suffered from the various democratic challenges sweeping the region. But what was interesting to note was how presentations from established regions such as South Africa were so negatively received.

South Africa made a strong play over accent. They claimed to have the most attractive accent for voice agents in the offshore outsourcing market, yet there was very little else to support their claims. Even academics were leaving their session wondering what happened to the previously significant contact centre industry in that region.

Though Poland was the only Central and Eastern European nation actually presenting on the main agenda, they became grouped with both the UK and Germany. All EU nations and all focused far more on the availability of skills, flexibility, and knowledge than just low-cost workers.

The market for offshore outsourcing has changed and matured, so it’s good to see regions such as Poland now aligning their offering with Western Europe. The wider EU has a strong case when pitching for hi-tech work – customers and suppliers have moved on.