SIG and Globality, the world’s only AI-powered Marketplace and Platform for B2B services, partnered to produce a study looking into why B2B services remains one of the greatest untapped opportunities to drive business value
Almost 70% of Globality and SIG survey respondents indicate that they are either proceeding as planned or are now accelerating their digitization initiatives.
However, bridging the gap between intent, action, and a positive outcome has never been an easy endeavor. In fact, and as pointed out in her latest book, Trade wars, pandemics, and chaos: How digital procurement enables business success in a disordered world, Dr. Elouise Epstein talks about how people are coming clean about the challenges with their existing or historical tech. In other words, organizations need more than just a desire to digitally transform the enterprise if they hope to avoid the same pitfalls that have undermined initiatives in the past.
The purpose of this article is to leverage the insights gained from the Globality and SIG survey to create a clear and more certain path to digital transformation success.
According to most survey respondents, there are several priorities when it comes to digitization in critical areas. These top priority areas include the rapid identification, selection, and engagement of suppliers, the ability to react with speed to market dynamics, and the capability to drive revenue through innovation.
While varying degrees of organizational maturity regarding procurement processes may result in some differences in the priority of identified objectives, there is generally no argument that the benefits of a progressive digital strategy are clear.
As the need for change and innovation continues to grow, companies are rapidly shifting focus towards outsourcing as a solution to assisting in digital innovation.
For many US companies, understanding the total cost of IT talent services has always been challenging, and is even more concerning now as budgets and resources continue to tighten during the COVID-19 crisis. Here are my thoughts on what to consider as you source IT talent and how to drive the “true India costs” that so many US firms are looking to take advantage of now.
Impact of Uncertainty
Many companies experienced an unanticipated disruption due to the Covid-19 crisis. Project timelines had to be extended, delivery negatively impacted and enterprise control compromised. While there’s no doubt that the pandemic has had an impact in some shape or form on all businesses, we have not seen a significant disruption with our clients at SMC Squared, in part due to the business continuity plans that were already set in place.
Continuity plans are a basic deliverable from the time of initial setup with SMC Squared and are essential for every global office. All SMC Squared global employees are provided with secure laptops and remote connectivity as part of our continuity plan if the office is not accessible. This was tested for our clients prior to COVID, so when Prime Minister Modi announced the shutdown with short notice, all of our employees had their laptops with them, including those who may have traveled home to their native places over the weekend. Therefore, despite the continued uncertainty of the pandemic, the change has had a minimal impact on work capacity.
Steven Stephan, SVP of Global Services & Co-Founder of SMC Squared
As access to COVID-19 vaccines increases and covid variants become increasingly concerning, companies around the world are actively discussing how to build a hybrid work culture, somewhere along the continuum of fully returning and fully remote, with many options in between.
After a year of working from home, the employee mindset has shifted with many people discovering that they enjoy the additional flexibility to balance their family lives while others are “Zoom fatigued” and eager to get back to the office for face-to-face interaction and personal growth. The answer probably lies in a range of options and the phasing of return to office (RTO), creating the “new normal”.
At SMC Squared we’re actively discussing and preparing for RTO for our own teams and guiding many clients. The goal is to continue to maintain a safe environment for an engaged and highly productive workforce. I’ve challenged our management team to rethink how we listen, remain flexible, and importantly retain our employees. We are working to ensure they feel safe returning to the office while also maximizing their opportunities for career growth, collaboration, and mentorship.
It’s not going to be easy as the workplace mindset has rapidly shifted over the last year. Companies must define what a hybrid working model means for them while putting in place different options to balance the needs of the organization and of their people. In addition to the internal challenges, organizations face external factors such as vaccination availability, COVID-19 caseloads, work-life balance, and the highly active and competitive job market.
Patricia Connolly, CEO and Co-Founder, SMC Squared
Recently, SIG had the pleasure of hosting a panel of Everest Group experts for the July CPO & Executive Virtual Series. The panel included Vice President, Sourcing and Vendor Management, Amy Fong, Chief Research Officer, Michel Janssen, Everest Group Partner, Jimit Arora and Pricing Assurance Partner, Rahul Gehani. It was a very engaging discussion that lasted nearly two hours with tons of excellent takeaways. Let’s get into it!
Trends of the 2020 & 2021 Service Provider Wages
The focus of the meeting was BPO and IT services and the industry trends related to the supply market and successful buy-side organizations. Jimit Arora kicked the roundtable off with the findings from 2020 and early 2021 regarding the rates of IT and BPO services. One of the major points of emphasis was the renegotiating of rates after the dust settled from 2020.
Many of the suppliers realized that the previous rate discounts that were granted during the work-from-home scramble weren’t sustainable. As Jimit stated from Everest Group’s findings, “we are seeing situations where suppliers are going back to their clients saying, Hey, we need to re-up these rates, right?”
A major reason for this change is due to the inflation of the labor market. The question many companies are asking themselves is “how do you get your resources for what you need to accomplish at the correct pay rate, while still making it feasible to where people want to work versus just going on unemployment”. This issue is causing a constraint in general on the market and the talent pool that's available right now. And this remains true whether you view this from a United States perspective or an offshore international perspective.
For many US companies, understanding the total cost of IT talent services has always been challenging, and is even more concerning now as budgets and resources have tightened in a post-COVID-19 world. But as the need for change and innovation continues to grow, companies are rapidly shifting focus towards outsourcing as a solution to assisting in digital innovation.
Procurement commonly compares hourly rates because it’s an easy comparison. Well, not exactly. But the issue is that the invoice at the end of the month for a committed amount of work is what matters, not what the hourly rate states. Overtime, 45-hour billing weeks, etc. are ways offshore vendors distort billings and make your hourly rate look lower to win deals. So, how can you avoid additional costs associated with services provided by your outsourcing partner?
At SMC2 we find that many Global Insourcing Center RFPs ask for hourly rates as a selection criterion to support cost control or optimization. Hourly rates themselves are easy to compare but do not accurately reflect the actual costs to deliver services or projects. Fixed bids make an attempt at solving this issue, but are often laced with caveats and take a significant effort to understand scope.
Also, many people believe that although the rates in India are lower, it takes more resources to deliver the same value as a US resource. Ratios such as 3:1 or 2:1 are often cited, demonstrating a lack of understanding of India’s technical capabilities and, more so, the opportunity to optimize under a global team structure.
SMC2 has solved this issue by focusing on value generation instead of billable hours. Our teams are measured at the same level as their US counterparts in terms of productivity. This is expressed as 1:1 productivity. We provide the necessary time each week to guarantee a US-full time equivalent of contribution.
Steven Stephan, SVP of Global Services and Co-Founder, SMC Squared