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The HfS BPO TOP 50 | 1

© 2016, HfS Research, Ltd | www.hfsresearch.com | www.horsesforsources.com

HfS R e se arc h | T h e Se rv ic es Re s earc h Com pa ny™

THE HfS BPO TOP 50 Looking Beyond the Sourcing Event Horizon

Authors:

Jamie Snowdon, EVP Data Solutions, HfS Research Phil Fersht, CEO & Founder, HfS Research

Barbra Sheridan McGann, EVP Business Operations Research, HfS Research June 2016

Introduction Ever since the recession of 2008 and the subsequent recovery, the shape and direction of the BPO business has been

challenging to predict. A popular myth in the sourcing world is that a poor economic climate leads directly to

offshore-centric outsourcing to drive out operating costs; however, this is just not the case. During the 2008

recession, outsourcing growth took a significant hit as many enterprise organizations shied away from radical

business decisions.

In spite of some economic recovery in recent years, market conditions have remained challenging as enterprise

buyers questioned the true ROI of outsourcing business processes. While there is clearly money to be saved through

labor arbitrage, many enterprises have invested in their own shared services centers to drive productivity, believing

they can drive their own savings through centralization, internalized offshoring of work and better streamlined

technology systems. In short, today’s BPO provider has to deliver a whole lot more than cost efficiencies and

standard delivery dues to the following factors:

» Questions about the effectiveness of BPO to drive ongoing efficiency after transition: Enterprise companies

that use outsourcing and those that don’t are increasingly questioning the efficacy of outsourcing itself. This is

partly due to the success of outsourcing in the early stages where it was seen to drive out significant cost.

Without innovation, these savings plateau.

» Use of automation as an additional productivity lever: As automation and robotic process automation

become increasingly accessible to business units, and show results in driving improvements in quality,

predictability, and throughput, companies start to question how and when to leverage automation internally

versus outsourcing to service providers. In reality, it is not an either/or situation, and the best case scenario is

for the service buyer to partner with the service provider to determine the right course of action to drive

business outcomes.

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» Disruption from digital, and a focus toward growth: We have seen waves of disruption hit industries thanks

to digital technologies. Within many enterprises, senior management is focusing on how to use these

technologies to drive growth, and is not viewing a BPO arrangement with the same lens—that of driving

growth versus cutting cost and increasing efficiency. Again, it does not need to be a choice. However, in moving

to bring together talent and technology in a business process services arrangement to drive business

outcomes, an enterprise also needs to be ready to share or relinquish control, which we explore in our PoV:

Defining the Seismic Shift From Legacy BPO to BPaaS.

With these market characteristics in mind, HfS has decided to make public its list of the largest BPO providers. As

many will be aware, HfS has been publishing an IT Services provider list for a few years. As part of this exercise we

also collected BPO revenues. This year we have decided it was time to make this available to our readers and publish

this list of the top 50 providers by revenue.

Exhibit 1 shows the first 25 providers in the list and Exhibit 2 shows the second 25. We have included the position of

the combined Alorica/EGS and mentioned the revenue HP Enterprise Services is likely to achieve with the merger of

CSC.

Additionally, we have segmented the providers into 5 broad categories: HRO specialists, customer care specialists,

BPO Multi’s, IT Multi’s and document management providers. The specialist areas: document management,

customer care and HRO should be fairly clear—the vast majority of the services these company provides in BPO is

related to this category. The IT multi providers and BPO multi providers—divides the companies that provide

multiple types of BPO services into those with an IT heritage and those without. These categories are subjective; we

based these splits partly on the type of services they provide and individual company background. For example,

Accenture provides multiple types of BPO service and has a sizable IT services business so we have described as a IT

multi.



http://www.hfsresearch.com/pov/defining-seismic-shift-legacy-bpo-bpaas




Exhibit 1: The HfS Top 50 BPO Providers – Part 1, 2015

Rank

2015

Service Provider Estimated BPO Revenue 2015

($Billion)

Market Share (%) BPO Category

1 ADP 9.0 5% HRO

2 Xerox 8.3 5% BPO Multi

3 Accenture 4.0 2% IT Multi

4 Capita 3.9 2% BPO Multi

5 Teleperformance 3.8 2% Customer Care

6 Arvato 3.5 2% BPO Multi

7 Convergys 3.0 2% Customer Care

8 Paychex 2.8 2% HRO

9 Aon Hewitt 2.7 2% HRO

10 HPE 2.0 (2.6 including CSC) 1% IT Multi

Pending Alorica / EGS 2.3 1% Customer Care

11 Atento 2.0 1% Customer Care

12 Genpact 1.9 1% BPO Multi

13 TCS 1.9 1% IT Multi

14 Transcosmos 1.9 1% Customer Care

15 Acticall / Sitel 1.8 1% Customer Care

16 Williams Lea 1.6 1% Document

17 TowersWatson 1.5 1% HRO

18 IBM 1.5 1% IT Multi

19 Concentrix 1.4 1% Customer Care

20 TeleTech 1.3 1% Customer Care

21 Sykes 1.3 1% Customer Care

22 Alorica 1.2 1% Customer Care

23 Atos 1.2 1% IT Multi

24 Iron Mountain 1.2 1% Document

25 Serco 1.1 1% BPO Multi

Top 25 65.6 36%






Exhibit 2: The HfS Top 50 BPO Providers – Part 2, 2015

Rank 2015 Service Provider Estimated BPO Revenue 2015

($Billion)

Market Share (%) BPO Category

26 EGS 1.1 1% Customer Care

27 CGI 1.1 1% IT Multi

28 Contax 0.9 1% Customer Care

29 SourceHOV 0.9 1% BPO Multi

30 Fidelity

Employer

Services

0.9 1% HRO

31 Webhelp Group 0.8 0% Customer Care

32 Pitney Bowes 0.8 0% Document

33 Ceridian 0.8 0% HRO

34 NorthgateArinso 0.8 0% HRO

35 Mercer 0.8 0% HRO

36 Sutherland 0.8 0% BPO Multi

37 Transcom 0.7 0% Customer Care

38 Wipro 0.7 0% IT Multi

39 SPS 0.7 0% Document

40 CapGemini 0.7 0% IT Multi

41 DST 0.6 0% IT Multi

42 Tivit 0.6 0% IT Multi

43 CSC 0.6 0% IT Multi

44 Steria 0.6 0% IT Multi

45 Minacs 0.6 0% Customer Care

46 Trinet 0.5 0% HRO

47 WNS 0.5 0% BPO Multi

48 EXL 0.5 0% BPO Multi

49 Xchanging 0.5 0% BPO Multi

50 Firstsource 0.5 0% CustomerCare

Top 50 83.5 47%

Source: HfS Research 2016 estimated from services provider financials. Revenues are fitted to nearest calendar year. We attempt to make the BPO services numbers as close to HfS definitions as possible. The market primarily used for this list is the horizontal BPO processes of F&A, HR, Customer Care/CRM, and Procurement. Some industry-specific back office processes are included but we have excluded specialist categories, for example, banking securities.






Why This Matters The mix of the top 50 is interesting as it contains providers from a range of backgrounds, from providers with IT

Centric background, pure play BPO providers, and specialist BPO providers (HRO, customer care and document

management) but doesn’t include some providers that have a profile in BPO, because of the service providers’

categorization of revenues or relatively speaking small revenues. For example, of the big 5 offshore centric IT services

providers (Wipro, Infosys, TCS, HCL and Cognizant), only Wipro and TCS make it into the list. Likewise, IBM, since the

spin-off of its Customer Care business to Concentrix, has a relatively small pure BPO service business, particularly

when you compare it to Accenture, the biggest of the IT centric BPO players by double.

What may become tricky to spot over the next few years is the shift from labor intensive BPO toward more

automated platform and software driven business process solutions, such as BANCS at TCS, and the portfolio of

BPaaS solutions at Cognizant. Some or all of this revenue inevitably will get recorded as “digital,” or IT, which could

dilute the position of, in particular, the more IT focused service providers in the list.

Exhibit 3 illustrates the spectrum of providers in the top 50 by the major segments provided above.

Exhibit 3: Share of the Top 50 BPO Market by Group

Source: HfS Research, 2016

The size of these groups are roughly equal, with providers split into multi-process BPO pure plays like Genpact and

EXL. Customer care providers like Teleperformance, Convergys and Concentrix, HR specialist providers like ADP and

Paychex, and finally, the mainstream IT/BPO services firms that deliver BPO across different process areas, like

HRO24%

BPO Multi26%IT Multi

18%

CustomerCare27%

Document Outsourcing

5%






Accenture and IBM. In growth terms the specialist providers from both HRO and customer care backgrounds enjoyed

the most success in 2015. With HR providers showing the best performance with average growth of around 5%, and

customer care at 4%. The BPO pure plays grew at 2%, but the IT/BPO providers’ BPO revenues dropped 4%. This was

partly due to divestiture of CSC’s federal business, but also a slowdown in growth of all the main players in this

category. As we mentioned above we have seen these providers emphasize the transformational skills and the desire

to shift to more automated platforms, emphasizing software driven business process solutions. This is starting to

impact pure BPO revenues as some of this work is becoming IT/BPO combined, delivered in BPaaS/SaaS model,

consulting and systems integration rather than outsourcing.

Exhibit 4 illustrates this change in the market and the transition to more As-a-Service spend with the BPO market.

Exhibit 4: Horizontal BPO Market – Traditional vs. As-a-Service

Source: HfS Research, 2016. As-a-Service BPO includes BPaaS and related platform based business process services

delivered in a pay-per-use / As-a-Service fashion and professional services revenues related to the transformation

this type of model. The market primarily includes the horizontal BPO processes of F&A, HR, Customer Care/CRM, and

Procurement. Some industry specific back office processes are included but we have excluded specialist categories,

for example, banking securities.

169176

184191

199207

216

2014 2015 2016 2017 2018 2019 2020

Mar

ket

Size

($

Bn

)

AAS BPO Traditional BPO






What to Watch The BPO industry has experienced a number of acquisitions in the past few years, particularly in the Customer Care

space. So we expect to see some change as the players consolidate. We know of at least two acquisitions that will

impact the list of top 10 providers next year already. Firstly, the Alorica and EGS merger. But also, the merger of HPE

Enterprise Services and CSC, which should help keep the new entity in the top 10.

Over the past 12-18 months the service providers showing the best growth have been the pure play BPOs that are

creating higher value offerings and the specialists that are very focused. These providers, particularly the specialists,

have been better able to invest in platforms and new technology to augment their process skills. And some providers,

particularly in HR, have been able to scale services to midmarket. HR processing services has always been heavily

reliant on technology and platforms for automating payroll have been in operation for decades. However, the new

platforms are able to simplify and in some cases automate a much broader range of more complex processes.

Additionally, we’ve seen some of the pure multi-process players like Genpact and EXL do well as they integrate

analytics and automation across the processes they manage.

The BPO market is a couple of years behind the IT Services market in the adoption of the Ideals of the As-a-Service

Economy. It has yet to feel the impact from a new wave of As-a-Service players that could start to erode revenues

and rapidly build share, the way SaaS has impacted the on-premises market. So far, no equivalent to AWS or Google

set to disrupt the BPO market in a fundamental way has emerged. Although it is important to remember that the

big change in the IT infrastructure outsourcing market started when tier two providers started to offer less asset

intensive services, more remote services and more automation, which culminated with the later move to more cloud

based infrastructure. So the change to the As-a-Service model wasn’t quite as rapid as hindsight tells us—with

development of cloud partly due to technical advances and partly due to the way the service is offered to the World.

The BPO industry is bracing itself for changes that are as fundamental, as we see service delivery shift away from its

reliance on labor-intensive process, toward more technology intensive, intelligent and adaptive operations. It may

be that the detailed process centric knowledge required to build an effective BPO platform means the disruption

will be driven from existing providers or from a process oriented technology player. And although the final change

to a fully BPaaS model may include a new breed of provider, the transition is likely to start from within existing

providers.

In the past, the BPO market was driven by service providers creating operational efficiencies within large enterprises

focusing on back office processes. We expect these very process centric offerings to continue—with ever more

standardization and automation driving down the cost. But the real shift in BPO will happen when operations shift

away from this back office focus and look to deliver additional value by focusing on the customer first, which also

means bridging the front and back office. We have seen various initiatives focus on creating value by delivering

processes end to end, but they typically starting from back to front (office). This back to front thinking is at odds with

the way strategic initiatives are driven by most companies, particularly in light of recent wave of digital

transformation and design thinking which aim to align strategic direction of enterprise organizations to customer

requirements. To ensure operations are able to support more customer first strategic thinking, operations need to

be engineered so that they are intelligent and adaptive, better matching the strategic imperatives set out by senior

management. The next step in this transition will be the removal of the distinction between the current front, middle






and back office operating model—and replacing it with a single or “One Office” approach to operations, where

everyone in the operation is focused on the customer experience.






About the Authors Phil Fersht, Chief Analyst and CEO

Phil Fersht is Founder and Chief Executive Officer of leading global

analyst authority for the services industry, HfS Research. He is an

acclaimed author, analyst and visionary in Global Business Services and

Outsourcing, the Digital Transformation of enterprise operations and

talent strategies. Fersht coined the term "The As-a-Service Economy"

which is HfS Research's vision for the future of the global services and

outsourcing industry and has become widely adopted by the global

services industry.

Fersht founded HfS Research in 2010 and has masterminded the

development of the HfS organization as a leading analyst for the

provider, in addition to steering the business operations. He is also

author and creator of the most widely-read and acclaimed blog in the

global services industry, entitled “Horses for Sources” and now entering its ninth year, attracting over a million visits

per year across the globe. At HfS, he directs the provider’s research, advisory and global knowledge community,

which today totals over 100,000 professionals and is served by a respected global analyst team.

Under Fersht's stewardship, HfS Research has become the leading industry analyst provider for growing influence

and value, based on the results of 1093 industry participants in the 2014 Analyst Value Survey. He was named

"Analyst of the Year 2011” by the Institute of Industry Analyst Relations (IIAR), winning the premier analyst award

for a second successive year - the most coveted global award for industry analysts in technology and services

industry. In 2012, the International Institute of Analyst Relations (IIAR) awarded HfS research as Most Innovative

Analyst Provider.

Over the past 20 years, Fersht has lived and worked in Europe, North America and Asia, where he has advised on

hundreds of operations strategy, outsourcing, and global business services engagements. During his career, Phil

Fersht has worked at Gartner Inc. (AMR Research), directing the provider’s BPO and IT Services practices and served

as market leader for Deloitte Consulting’s BPO Advisory Services, where he led numerous outsourcing and offshoring

advisory engagements with Fortune 500 enterprises. He began his career with IT analyst IDC.

Fersht contributes regularly to media such as Wall St Journal, Business Week, Economist, The Times of India and CIO

Magazine and is a regular keynote speaker at major industry events, such as NASSCOM, Sourcing Interests Group

and the HfS Blueprint Sessions.

He received a Bachelor of Science, with Honors, in European Business & Technology from Coventry University, United

Kingdom and a Diplôme Universitaire de Technologie in Business & Technology from the University of Grenoble,

France. He also has a diploma from the Market Research Society in the United Kingdom.

Phil can be reached at [email protected] and followed on Twitter @pfersht.




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Jamie Snowdon, EVP Research

Jamie Snowdon has primary responsibility for overseeing the development of HfS’

quarterly demand tracker, in addition to managing and developing the provider’s data-

centric products and services. He works across the HfS analyst teams to define evolving

services markets and create market size estimates and forecasts. He also manages HfS’

quantitative survey and benchmark data. Jamie has over 18 years’ experience in the IT and

business services industry. In that time, he has worked in a variety of roles, including sales,

marketing, consulting and as an industry analyst. Jamie’s analyst career has largely been

spent conducting data analysis including market size/forecast models,

quantitative/qualitative survey analysis and competitive analysis.

Prior to HfS, Jamie has worked for a number of analyst providers including IDC and Nelson-

Hall. He worked as a Research Director for Nelson-Hall, where he conducting vendor and market analysis examining

the IT and Business Services community. Additionally, Jamie has spent several years at IDC, most recently as the

head of European infrastructure services research. Prior to that he was the European consulting director for IDC’s

services group, managing all of their bespoke research. Jamie specialized in delivering custom market forecast

models and forecasting tools tailored to his client’s individual needs. In addition, Jamie ran IDC’s European

outsourcing research, covering both IT and business process outsourcing. Jamie has wide industry knowledge

covering IT consulting, enterprise applications, IT & business process outsourcing, desktop & network services,

equipment maintenance, and business continuity.

Earlier in his analyst career, Jamie spent four and a half years at the IT services research specialist INPUT in a mixture

of marketing and analysis roles. He left as the UK operations manager having spent two years as a customer services

industry analyst. Jamie completed his graduate training at one of the UK’s leading electronic and IT distribution

companies. Jamie’s passion is learning; he holds university degrees in general science (computing), law and has a

postgraduate diploma in legal practice. He lives in Twickenham, London with his wife, and two daughters. His other

loves include cycling, reading trashy sci-fi, cool technology and the perfect pint.

You can find him on Twitter @TheWizeOne and via email at [email protected].



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Barbra McGann, EVP Research

Barbra Sheridan McGann is Executive Vice President, Business Operations Research, at

HfS Research. Barbra’s scope of work covers the business process outsourcing and

emerging “As-a-Service Economy,” as well diving into themes such as talent and design

thinking, and industry and functional areas of Healthcare and Life Sciences.

Barbra’s experience in this industry includes: researching, analyzing and advising on

market and competitive moves and meaning; developing organic and inorganic strategies

to drive growth of new and mature offerings with business process services, and building

partnerships and strategies for joint success. Her work history includes almost 20 years at

Accenture; and prior years in marketing and not-for-profit management.

Barbra earned a Bachelor of Arts degree in English with Honors, and was recognized for outstanding leadership in

Volunteerism with the Chet Pagni Service Award, from the University of San Diego. She’s also completed post-

graduate executive leadership work at Northwestern University and Smith College.

Barbra lives near the windy city of Chicago, spending as much time outside, with whatever activity fits the ever-

changing weather, including, gardening, hiking, and cross-country skiing. She also coaches AYSO soccer locally.

You can contact Barbra at [email protected] and follow her on Twitter @sheridanmcgann.




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About HfS Research HfS Research is The Services Research Company™—the leading analyst authority and global community for business operations and IT services. The firm helps enterprises validate their global operating models with world-class research and peer networking.

HfS Research coined the term The As-a-Service Economy to illustrate the challenges and opportunities facing enterprises needing to re-architect their operations to thrive in an age of digital disruption, while grappling with an increasingly complex global business environment. HfS created the Eight Ideals of Being As-a-Service as a guiding framework to help service buyers and providers address these challenges and seize the initiative.

With specific focus on the digitization of business processes, intelligent automation and outsourcing, HfS has deep industry expertise in healthcare, life sciences, retail, manufacturing, energy, utilities, telecommunications and financial services. HfS uses its groundbreaking Blueprint Methodology™ to evaluate the ability of service and technology providers to innovate and execute the Eight Ideals.

HfS facilitates a thriving and dynamic global community of more than 100,000 active subscribers, which adds richness to its research. In addition, HfS holds several Service Leaders Summits every year, bringing together senior service buyers, 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. Horses for Sources and the HfS network of sites receive more than a million web visits a year.

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



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