Nasscom HFS BPM Final 10 Oct 2022 Final

The Evolution of BPM Services |
Cost, Outcomes and Growth

October 2022
© 2022 | HFS Research 1

“ It is not the strongest
or the most intelligent
who will survive but
those who can best
manage change.
– Charles Darwin

Foreword
The BPM industry is primed for some fundamental changes as the current “effort-based” model becomes more and more misaligned for
clients seeking better data, better performance, and much more dynamic partnerships to not only help them operate effectively but also find
new sources of value to drive growth and innovation in today’s tough macro-economic environment.
When BPM engagements are driven by effort, there is very little incentive to explore new methods of creating value, such as automation, AI,
quality data, etc. The service provider is incentivized to maintain/increase the staffing levels, not invest in programs to reduce manual
dependencies. Enterprises need to pay for performance, not effort if they ultimately want to benefit from sharing a common purpose with their
provider. Net-net enterprises and their service partners must be motivated to achieve the same goals if they want to enjoy a long-term,
mutually beneficial relationship. Purpose of the client and provider must be aligned, or the relationship ultimately fails.
Our research on 600+ G2000 enterprises in partnership with NASSCOM proves BPM services of the future should align with the enterprise
growth agenda; not just better, faster and cheaper operations.
Through this report we dwell deeper into the evolution of the industry from cost to outcome to growth and how service providers can adapt and
evolve with the changing needs of global enterprises. With the ever-changing macro-environment, we discuss imperatives for India to continue
its leadership position and emphasize its relevance to the World.
Phil Fersht
K S Viswanathan
CEO & Chief Analyst, HFS Research
Vice President (Industry Initiatives), NASSCOM

Table of contents
Digital transformation is now Horizon 1. It is essential for
12 survival. Enterprises are on a path to find new sources of value
19 Cost, Outcomes, Growth – The Evolution of BPM Services
25 BPM solutions to drive enterprise growth & innovation
India expected to continue to be the bellwether for

32 BPM industry
It’s time to accelerate the shift. Top 3

37 recommendations for the BPM industry

Research Objective and Context
The receding pandemic era is proving a turning point for the Business Process Management (BPM) industry as enterprises seek nimble
partners to support their urgent needs for talent resourcing, technology modernization and process transformation to operate effectively in
today’s virtual business environment.
To this end, NASSCOM and HFS Research have partnered to survey 600+ global enterprises and interview leading BPM service providers to
understand the current state of the BPM industry and how service providers can adapt and evolve with the changing needs of global
enterprises.
We address the following in our study:

• Macroeconomic factors impacting organizations with the current assault on business stability, and how this impacts the demand for third
party BPM services
• The pivot from transactional to strategic BPM relationships
• Enterprise intentions to renegotiate their BPM contracts and intentions with their future relationships
• Enterprise challenges that ambitious BPM service providers need to address
• The increasing importance of data provision as a core value differentiator for BPM services
• The changing talent gaps of enterprises which BPM services can fill
• The impact of remote hybrid work on BPM
• The changing mindset of BPM customers preferring to pay for outcomes and data, as opposed to the linear provision of people resources
• Technologies supporting BPM operations where BPM service providers are expected to support

Research Methodology
The research was based on a survey of 600+ global 2000 enterprises and executive interviews with leading BPM providers conducted
between June to August 2022
Global coverage Focused on G2000 enterprises Across industries Banking (retail banking, wholesale banking, wealth management)
% respondents % respondents % respondents Capital markets (shares, securities, secondary markets)

Healthcare provider (primary care, nursing care, specialty care)
Healthcare payer/insurer
United States
3% Life sciences (pharmaceutical, biotech, medical devices, generic
Canada $500M to $1B
10% 0% 5% 8% manufacturers)
13% 15% 6% Insurance (life & annuity, property & casualty, reinsurance)
Uk and Ireland 5%
6% Between $1B and $5B 5% Industrial manufacturing (e.g. automotive, process, aerospace,
34% Western Europe 7%
heavy equipment, chemicals)
7% 6% Consumer products (e.g. clothing, food, household goods)
Nordics 5%
Middle East Between $5B and $10B 5% Media, entertainment & publishing (e.g. music, gaming, film,
6% 6% television, content education)
India 33% Retail (including stores, supermarkets, and specialty retailers)
5% 8% 6%
5% Asia Pacific 39% Between $10B and $50B Technology (Hardware, Software, Networking)
10% 7% 10%
15% Australia/New Zealand Telecommunications
5% 6%
Others Greater than $50B
Travel & Hospitality (e.g. airline, car rental, restaurants, hotels)
Logistics
Energy and resources (Oil and gas, mining)
Utilities (electricity, water, gas)
Client perspectives Service provider perspectives

• 600+ respondents from G2000 enterprises
• 50%+ C-level executives across IT and business
• 80% BPM-related decision makers
• 85% leveraging BPM services

Executive Summary (1/5)
The BPM industry needs to move to a new S-curve of value to keep pace with the emerging innovation focus of the G2000
• Over 60% of the enterprises are focused today on driving functional digital transformation but the innovation focus is expected to move towards finding
completely new sources leveraging an ecosystem mindset. Digital is now horizon 1 – it is essential for survival.
• Enterprises face multiple external headwinds (e.g., cybersecurity threats, inflation, supply chain disruptions) as well as internal challenges (e.g., talent
crunch and data issues) to meet their aspirations
• Technology emerges as the source of competitive differentiation and over 90% of the G2000 enterprises are expected to increase IT budgets by over 10%
(weighted average) over the next 12 months, though uncertainties like macroeconomic issues, geopolitics and delayed decision making may create some
headwinds.
• However, over 80% enterprises are seeking to renegotiate their BPM services contracts implying the industry needs to pivot to a new narrative in order to
align more closely with enterprise innovation goals
BPM services of the future should align with enterprise growth agenda; not just better, faster and cheaper operations
• Client expectations from BPM services are evolving rapidly. Nearly half of enterprises (49%) strongly view their BPM relationship shifting from
transactional relationship to one of strategic business partner
• Cost savings and efficiency are important but no longer sufficient. BPM services need to drive business outcomes and support enterprise innovation
• Technology and data capabilities emerge as the most important value creation levers to drive BPM for growth. Introducing new technologies / platforms is
now posing the biggest challenge BPM providers must address. This is bigger than cost reduction and efficiency. Supporting innovation, driving business
outcomes and generating quality data are also high on the minds of BPM enterprise clients.
• Nearly 95% respondents agree that the boundaries between IT services and BPM Services will also need to blur to drive real transformation.
• BPM providers must reassure clients they do not increase exposure to security and data privacy threats. Cybersecurity attacks and data breaches top the
concerns that impact enterprise clients. In addition, trust, governance, risk and compliance top the challenges enterprises want to address with their
BPM partner.
Analysis based on survey of 600+ global 2000 enterprises conducted between June to August 2022
BPM services of the future should align with enterprise growth agenda; not just better, faster and cheaper operations
The Evolution of BPM Services

Stage 3: Growth and Innovation
(The future)
Stage 2: Business Outcomes • Finding new sources of value

BPM (2010 till today) • Data led solution
• Cost savings & efficiency Stage 1: Cost • Driven by problem-solving skills
Services • Offshore led solution • Better business outcomes
(Till 2010) • Scoped by enterprise-level data flows
Value • Functional activity scope • Digital led solution
Proposition • Technology as a competitive differentiator
• Enabling technology • Driven by process expertise
• Performance and value driven pricing
• Effort-based pricing • End-to-end process scope
• Supplier as ecosystem orchestrator
• Vendor relationship • Hybrid of effort and performance pricing
• Business Partner relationship
BPM Services Market maturity
Which of the following statements most accurately represent your current BPM model? What do you expect it to be in 2-3 years?
% respondents
47%
42% BPM services today BPM services in 2-3 years
35% 33%
26%
19%
Focused on COST SAVINGS & efficiency driven by Focused on driving BUSINESS OUTCOMES driven by Focused on finding NEW SOURCES of value leveraging
LABOR ARBITRAGE with a primarily FUNCTIONAL scope process/domain EXPERTISE and DIGITIZATION DATA DRIVEN insights and EMERGING TECHNOLOGIES
(AP, AR, claims, etc.). with an END-TO-END process scope across ENTERPRISE data flows
(e.g., Order-to-Cash, Hire-to-Retire, etc.) (customer data, employee data, financial data etc.)
Sample: Survey responses of 604 global 2000 enterprises conducted between June to August 2022. Totals might not add to 100% due to round-offs.
Source: HFS Research in partnership with NASSCOM, 2022

The future BPM solution: Find new sources of value, leveraging problem solving global talent pool, using data-as-an-asset, powered by
emerging technologies
• Data emerges as the secret weapon: Nearly 90% respondents agree that the real untapped value in third-party business services resides in the data-
driven insights that they can generate, not just in executing processes efficiently
• BPM of the future will be organized around enterprise data flows: Over 75% enterprises organize BPM scope by underlying process today but nearly
40% expect services to be defined around enterprise data-flows in the next few years (customer data, employee data, vendor data)
• BPM talent will focus on solving problems: While process / domain expertise will continue to remain important, the added focus on BPM talent will be
around technology skills and soft skills (e.g., problem solving)
• A balanced delivery model across offshore, nearshore, onshore and anywhere shore will be required: Over 50% of respondents believe that
remote work has opened new opportunities. 30% believe that the great resignation has dried up talent and they need greater access to talent. Clients
expect 6-7% increase (weighted average) across all delivery models – offshore, nearshore, onshore and anywhere shore.
• Performance and value driven pricing: Majority of respondents expressed they would prefer to pay for BPM services based on quality of data /
business outcomes than resource-based pricing to shift the whole BPM discussion to one of “performance and value” versus merely “effort provided.”
• Technology emerges as a competitive differentiator: Advanced analytics, SaaS, and Cloud capabilities are the key technologies that clients expect
BPM providers to bring to the table.
Key changes to BPM solutions of the future
Use the underlying data to support decision making and Organize BPM services across enterprise-wide customer, Invest in better technology talent and stronger
find new sources of value, not merely for reporting employee and partner/supplier data-flows communication skillsets
How are you using the underlying DATA produced by your How do you define the scope of services for your BPM What is the type of talent that you want to receive from your
BPM provider? initiative? BPM provider? (Top 3)
% respondents % respondents % respondents
38% 38%
21% 23%
Technology experts 19%
Soft skills (Communication,

15%
Using data-as-an-asset to find completely new sources of Scope is organized around enterprise-wide data flows (e.g., Negotiation, etc.)
value customer data, employee data, supplier/partner data)
Problem solving, analytical,
BPM services today BPM services in 2-3 years BPM services today BPM services in 2-3 years 14%
Logic & Reasoning skills
Build a balanced model across offshore, nearshore, Stop buying and selling BPM by effort. Pay for quality of Invest in Advanced analytics, SaaS, and Cloud
onshore, and location agnostic delivery data and outcomes capabilities
If you are changing your delivery strategy, what is the primary How would you prefer to pay for BPM services? What are the main technologies that you expect your BPM
reasons for the change? % respondents service provider to drive in the future? (top 5)
% respondents % respondents
Remote/ hybrid work has opened up new
44%
opportunities 40% 38% 38%
5% 35%
9%
The great attrition has dried up labor pools Primarily on
and we need greater access to talent Primarily on quality
43% 47% number of staff
We are seeking different outcomes within of data / business being provided to
53%
our sourcing engagements outcomes being deliver services
43%
provided
We are not changing our delivery strategy Hybrid/Multi Advanced SaaS Digital Process
Cloud analytics platforms assistants and data
mining tools

India expected to continue to be the bellwether for BPM industry
• India will continue to be the bellwether for BPM industry. Over 60% enterprises declared extreme satisfaction with the delivery of Cloud, AI, F&A, data and
insights from India.
• India has the highest concentration of G2000 enterprises currently using and evaluating as delivery location for BPM services. Indian BPM accounts for
nearly 40% of the Global Sourcing spend
• The scale of technical talent continues to be the primary source of competitive advantage for India
It’s time to accelerate the shift. Top 3 recommendations
1. Align BPM with client’s growth and innovation agenda. Evolve BPM narrative and solutions beyond effort and business outcomes to drive new sources of
value that enables client growth
2. Become the orchestrator of people, process, technology, data, and change management capabilities
3. Remember EX (Employee Experience (EX) = Customer Experience (CX)
Digital transformation is now
Horizon 1. It is essential for survival.
Enterprises are on a path to find
new sources of value

Digital is now Horizon 1 – it is essential for survival. We are hurtling towards
Horizon 3 to find new sources of value
What is your organization’s current expected innovation focus?
% respondents
Horizon 1 Horizon 2 Horizon 3
Functional Digital Transformation Enterprise Transformation Ecosystem Transformation
63%
44%
29% 29% 27%
9%
Digitalized processes to drive End-to-end organizational alignment Collaboration across likeminded

improved business outcomes focusing on across front, middle, and back to drive organizations with common interests
individual elements of the value chain unmatched stakeholder experience to find completely new sources of value
Current innovation focus Expected innovation focus in 2 years

Enterprises are facing multiple macro-economic headwinds…
What are the most concerning macro-environmental factors that are currently adversely impacting your organization’s goals?
% respondents
Rank 1 Rank 2 Rank 3
14%
13% 14% 12%
13%
13% 12%
15% 11%
11%
14% 15% 13%
12% 11% 10%
18% 17%
13% 11% 12% 10% 10% 10%
Cybersecurity: Inflation Supply chain Changing The great Potential On-going Geopolitical
Data breaches, disruption issues consumer resignation/ recession pandemic impact conflict
or privacy risks expectations talent turnover

…and internal challenges are adversely impacting their strategic goals
What are your company’s internal challenges to meet your strategic objectives?
% respondents
9%
12% 10%
11% 10% 12%
9%
12% 7%
11% 9%
12% 8% 11%
10% 9%
8%
6%
13% 13% 11%
10% 9% 8% 8% 7% 7%
Hiring Lack of Retaining Poor automation Organizational Lack of Staff reluctance Lack of C-level Poor software
quality staff centralized data quality staff of processes / silos / Lack of innovation to return leadership applications
governance data internal alignment from third party to the office commitment
across the services
organization

Over 90% of the G2000 enterprises are expected to increase IT budgets
over the next 12 months, however…
How is your IT budget expected to change in the next 12 months?
% respondents
Weighted average = 11%
28%
25%
19%
18%
5%
1% 2%
1%
21-30% 11% to 20% 6% to 10% 1% to 5% increase No change 1% to 5% decrease 6% to 10% 11% to 20%
increase increase increase decrease decrease

…over 80% enterprises are seeking to renegotiate their IT/BPM
services contracts
Is your firm seeking to renegotiate contracts with your Is your firm seeking to renegotiate contracts with your
BPM service providers? IT service providers?
% respondents % respondents
3% 2%
14% 14%
Yes Yes
No No
Don’t know Don’t know
83% 83%

Limited use of data, GRC challenges, lack of emerging tech. adoption,
reactive culture, and talent attrition are the top 5 enterprise concerns
What are the top 5 challenges that your BPM relationship needs to address? Rank 1 Rank 2 Rank 3
% respondents
10%
14%
9% 9% 8%
11% 9% 9% 7%
11% 7% 8%
9% 9% 9%
13% 7%
8%
9% 9% 9%
9%
11% 13% 11% 12%
8% 9% 10%
7% 7% 6% 5%
Limited use of Trust, Lack of Reactive Talent attrition Lack of Lack of Lack of Cultural & Lack of Effort-based
underlying Governance, adoption of versus process / innovation change language understanding commercial
data to create Risk & emerging proactive domain management differences client-specific model
new sources Compliance technologies improvements expertise context
of value (GRC)

Cost, Outcomes, Growth –

Client expectations evolving rapidly- Nearly 50% of enterprises view their
BPM relationship shifting from transactional to strategic business partner
To what extent do you agree/disagree with the following statements?
% respondents
Service provider perspective
Agree Strongly Agree Somewhat Disagree Somewhat Disagree Strongly • “We’ve expanded many of our relationships to
become more business focused, playing more of
The real untapped value in third-party a role in the design phase than in the back end.
business services resides in the data-driven The future of BPM will be more about design,
50% 43% 5%
insights they can generate, not just executing and then running it as efficiently as possible.
a process efficiently When we get to the design + run, gain share
2%
models will be important.”
• “For some industries, it’s how to cross-sell and
The boundaries between BPM and IT services upsell. For others it’s about getting more share of
are beginning to blur in order to drive real 50% 42% 6% wallet, or value from their assets. It’s about
transformation
using data to make informed decisions”
2%
• “We are figuring out ways to extract the data and
play with it through analytics and research. We
The role of a BPM service provider is are hosting and then building algorithms on the
changing from a transactional supplier to a 49% 46% 3% data. Hosting and data extraction is
strategic business partner and disruptor commoditized, but the domain expertise and
2% business context is the hard part”
Sample: Survey responses of 604 global 2000 enterprises conducted between June to August 2022 . Totals might not add to 100% due to round-offs.

Cost savings and efficiency are important but no longer sufficient. BPM
services need to drive business outcomes and support enterprise innovation
Rank your organization’s main strategic expectations from BPM Service Providers in the next 2 years?
% respondents
Introduce new technologies / platforms 9% 10% 7%

Drive business outcomes (e.g., working capital, closing books,
7% 8% 9%
daily sales outstanding, customer churn, etc.)
Cost Reduction and process efficiency 7% 10% 6%
Support new products/services innovation 7% 7% 9%
Generate data to improve operations / efficiency 9% 5% 8%
Support fraud, risk, compliance and regulatory management 7% 7% 8%
Generate insights/data to drive growth 5% 9% 7%
Help automate existing processes 6% 7% 7%
Supports a more agile/scaleable workforce (e.g. seasonal fluctuations, M&A) 7% 7% 6%
Improve client satisfaction Score 9% 5% 5%
Take advantage of their Partner Enterprise Transformation Programs 8% 6% 6%
Reduce employee turnover 5% 5% 6%
Reimagine legacy processes 5% 4% 7%
Provide scare skills / talent 4% 6% 6%
Greater Sales Conversion 5% 5% 5%


Cost, Outcomes, Growth – the evolution of BPM services
Which of the following statements most accurately represent your current BPM model? What do you expect it to be in 2-3 years?
% respondents
BPM services today BPM services in 2-3 years
Stage 1: Cost Stage 2: Business Outcomes Stage 3: Growth and Innovation
47% (Till 2010) (2010 till today) (The future)
42%
35% 33%
26%
19%
Focused on COST SAVINGS & efficiency Focused on driving BUSINESS OUTCOMES Focused on finding NEW SOURCES of value leveraging
driven by LABOR ARBITRAGE with a primarily driven by process/domain EXPERTISE and DATA DRIVEN insights and EMERGING TECHNOLOGIES
FUNCTIONAL scope (AP, AR, claims, etc.). DIGITIZATION with an END-TO-END process across ENTERPRISE data flows (customer data, employee
scope (e.g., Order-to-Cash, Hire-to-Retire, etc.) data, financial data etc.)

• “Clients are now coming to us with a business problem and expecting us to bring capabilities from across the organization. They are asking us to help them
find new sources of growth, identify new revenue streams, and increase their ability to innovate.”
• “The perennial need was always cost savings with a flavor of flexibility. That’s still a strong driver, but there are more possibilities now. We are placing
technology on top of the core value proposition to play a role in driving new revenue for clients.”

Examples of BPM services aligned with enterprise innovation and growth
(Stage 3 BPM Services)
(The future)
Stage 2: Business Outcomes • Finding new sources of value

(2010 till today) • Data led solution
BPM • Cost savings & efficiency Stage 1: Cost
Services • Driven by problem-solving skills
• Offshore led solution (Till 2010) • Better business outcomes
Value • Scoped by enterprise-level data flows
• Functional activity scope • Digital led solution
Proposition • Technology as a competitive differentiator
• Enabling technology • Driven by process expertise
• Performance and value driven pricing
• Effort-based pricing • End-to-end process scope
• Supplier as ecosystem orchestrator
• Vendor relationship • Hybrid of effort and performance pricing
• Business Partner relationship
BPM Services Market maturity
Example #1. Airlines uses outcome-based BPM pricing based on recovered revenue Example #2. NewCo builds a scalable IPO ready operating platform to unlock
The BPM services provide comprehensive audit services across the ticket lifecycle for all significant value
types of fares sold worldwide through any distribution channel. Embedded analytics helps NewCo initiated a transformation program post carve out from parent food & beverage
identify any agency errors along with the reasons and dollar impact. A workflow engine company. Undertook multiple IT transformation projects as well as new GBS organization
enables the airline to review agent debit memos. across F&A, HR, Procurement and IT in partnership with service provider. The initiatives
resulted in an agile and lead standalone organization prepared for its anticipated IPO
Example #3. Mortgage company grows market share by 180% Example #4. Retailer improves sales in Europe and Middle East by 10% and
A north American mortgage company established an agile workforce and new operational improves in-store traffic
policies and governance models. With more than 50 automations, and new originations A retailer leveraged IT/BPM service providers design, analytics, and BPM services to
platform, a lender-optimization dashboard and other tools, the company was able to grow clarify their editorial voice and generate a gift destination within their stores. After a
its market share by 180%, generate $60M in savings, reduce turnaround by over 40% and repositioning of the brand, retail and digital experience in Europe and Middle East, the
increase underwriting productivity by 30%. retailer boosted the in-store visits and improved sales by 10%. It also created more than
2 million social media interactions within the first 3 months of opening. The design and
solution has now become their global model.

Technology and data capabilities emerge as the most important value
creation levers to drive BPM for growth
What are the most important value creation levers for meeting your expectations from BPM?
% respondents
28%
22%
19%
16% 16%
Technology capabilities Data capabilities Process / domain expertise Scale of talent Change
management capabilities

“All of the key technologies we are investing in are related to data. Then it becomes about systems of engagement: creating a common interface for
employees and customers”

BPM solutions of the future to drive
enterprise growth & innovation

Data | Use the underlying data to support decision making and find new
sources of value, not merely for reporting
How are you using the underlying DATA produced by your BPM provider?
% respondents
37% 38%
33% 33%
21%
18%
14%
7%
Not a focus area Mainly for reporting purposes To create insights for decision making Using data-as-an-asset to find
completely new sources of value

• “There is a significant change in client expectations, mostly innovation focused. Our efforts are no longer limited to data cleansing but also in generating
insights and decision validation.”
• “Working with our clients’ data is fascinating, complex and frustrating. Getting the quality and quantity of data, plus access with privacy regulations is a
challenge.”
• “As much as I’d like to say the real value is in data-based insights, we haven’t reached that point. It is a great potential for the future. Right now it is
nuggets and pockets of insight that add to process efficiency.”
Sample: Survey responses of 604 global 2000 enterprises conducted between June to August 2022. . Totals might not add to 100% due to round-offs.

Scope | Organize BPM services across enterprise-wide customer, employee
and partner/supplier data-flows
How do you define the scope of services for your BPM initiative?
% respondents

44%
42%
38%
33%
23%
21%
Scope is organized by functional activities Scope is organized across end-to-end Scope is organized around enterprise-wide
(e.g., AP, AR, GL, Claims etc.) processes (E.g., Order-to-Cash, data flows (e.g., customer data,
Procure-to-Pay, Hire-to-Retire etc.) employee data, supplier/partner data)

Talent | BPM service providers need to also invest in better technology talent
and stronger communication skillsets
What is the type of talent that you want to receive from your BPM provider?
% respondents
19%
15% 15% 14% 14%

12%
11%
Technology Soft skills Same skillsets as Problem solving, Project Process / domain New or scarce to
experts (Communication, in-house at lower analytical, Logic & management experts find skills
Negotiation, etc.) costs (labor arbitrage) Reasoning skills

“The war for talent is on. We’ve invested a lot in training, and the key ingredient we are looking to recruit for is learnability.”

Delivery Model | Build a balanced model across offshore, nearshore,
onshore, and location agnostic delivery
If you are changing your delivery strategy, what is the primary reasons To what extent will you change your delivery model for BPM services?
for the change? Weighted average % increase across all respondents
% respondents
6.1%
Remote/ hybrid work 5.8%
has opened up new 5.3%
opportunities
5%
9% 4.0%
The great attrition has
dried up labor pools
and we need greater
43% access to talent
We are seeking
different outcomes
43% within our sourcing
engagements
We are not changing

our delivery strategy Offshore resources Nearshore Location Onshoring
(different region, resource agnostic sourcing (same region,
different (different region, (including working same time zone)
time zone) similar time zone) from home)

Commercial Structure | Stop buying and selling BPM by effort. Pay for quality
of data and outcomes
How would you prefer to pay for BPM services?
% respondents

• “Clients want us to help them grow, find new
customers, and improve stakeholder experiences.
Mature clients have moved beyond
transactional work to become more outcomes
Primarily on number of staff focused.”
being provided to deliver services • “Clients are looking to tie the relationship to
47% outcomes. Combining tech, process, people
53% and analytics has changed commercial
Primarily on quality of data /
business outcomes being models big time. 70-80% of our deals are linked
provided to outcomes now.”
• “A problem that we haven’t yet solved is that a lot
of customers want to transform but because
the change is unknown, it’s hard to know how
to price. I’ve yet to see a reliable gain share
model. We need to think this through as an
industry.”

Role of technology | Invest in Advanced analytics, SaaS, and Cloud
capabilities
What are the main technologies supporting your BPM operations that you expect your service provider to drive in the future?
% respondents
44%
40%
38% 38%
35% 34% 34% 33% 33% 33% 33%
28%
Hybrid/Multi Advanced SaaS Digital Process and SaaS ERP / Machine Workflows Interactive / Distributed RPA
Cloud analytics platforms assistants data mining software System of Learning / AI collaborative ledger
tools records tools, technology
applications, such as
and social blockchain
media
Sample: Survey responses of 604 global 2000 enterprises conducted between June to August 2022. . Totals might not add to 100% due to round-offs.

India expected to continue to be the
bellwether for BPM industry

India has the highest concentration of G2000 enterprises currently using or
evaluating as delivery location for IT/BPM services
Is your organization using the following locations for IT or BPM services delivery?
% respondents (excluding onshore locations)
% respondents
25%
1%
Sample: Survey responses of 604 global 2000 enterprises conducted between June to August 2022
Indian BPM accounts for nearly 40% of the Global Sourcing spend
BPM records double digit growth in FY2022, CIS remains the largest revenue contributor
Indian BPM Industry size and growth Indian BPM Industry by nature of services
US$B US$B
Growth 1%
14% 2% 1%
44 Customer Interation
Services (CIS)
38 5.0
F&A
Domestic 4.5 13%
Knowledge Services
FY2022E 39%
Vertical-specific
100% = $39B
38.7 22% BPM HRO
Exports 34.0
Other Horizontals
22% Procurement &

Logistics
FY2021 FY2022E
Source: NASSCOM

India boasts of strong client satisfaction across most non-voice BPM
services and technology areas
How satisfied are you with the following locations for business or technology services delivery? Please rate it on a scale of 1-5 where 1=Extremely
disappointed and 5=Extremely satisfied.
% respondents
5 (Extremely Satisfied) 4 3 2 1 (Extremely Dissapointed)
Supply chain management 45% 36% 9% 9%
Internet of things (IoT) 47% 40% 11% 2%
Sourcing and procurement 49% 29% 16% 4%
Process automation 51% 39% 5% 5%
Customer service or contact center 52% 22% 18% 6% 2%
Finance and accounting 56% 28% 9% 7%
Blockchain 56% 26% 15% 3%
Cloud 61% 22% 12% 5%
Artificial intelligence 62% 29% 10%
Data and insights 62% 24% 10% 2%2%

The scale of technical talent continues to be the primary source of
competitive advantage for India
What are the primary reasons for your relative satisfaction with India?
% respondents
17%
13%
12%
11%
10% 10%
7%
7% 7%
6%
Talent Talent Cost Physical Infrastructure Government Talent Time zone Geopolitical Cultural
(technical skills) (analytical / proximity to and security interest in (language) proximity to stability / compatibility
data skills) my business investing in my business political
services environment
industry
expansion

It’s time to accelerate the
shift. Top 3
recommendations for the
BPM industry

#1. Align BPM with client’s growth and innovation agenda

(The future)
Business Services Value Proposition
• Finding new sources of value

Stage 2: Business Outcomes • Data led solution
(2010 till today) • Driven by hard-to-find skills
• Scoped by enterprise-level data flows
• Technology as a competitive
differentiator
• Better business outcomes • Performance and value driven pricing
• Digital led solution • Supplier as ecosystem orchestrator
Stage 1: Cost • Driven by process expertise
(Till 2010) • Cost savings & efficiency • End-to-end process scope
• Offshore led solution • Hybrid of effort and performance pricing
• Functional activity scope • Business Partner relationship
• Enabling technology
• Effort-based pricing
• Client – vendor relationship
Business Services Market maturity


#2. Revisit the BPM solution to find new sources of value leveraging
problem-solving global talent pool using data-as-an-asset and powered by
emerging technologies
People
• Diverse and inclusive
• Problem-solving, technical, analytical, and hard-to-find skills
• Global: offshore, nearshore, onshore, anywhere shore
Change management Process

• Baked into the solution versus an invoice • Eliminate process debt
line item • Trust, Governance, Risk, and compliance
• Value driven commercial model • Backed by process / domain expertise
Data Technology
• Make data a first-class citizen • Leveraged as a competitive differentiator
• Organize services around enterprise data-flows • AI-powered Cloud-enabled solutions
(customer, employee, vendor)
• Partner ecosystem

#3. Remember EX (Employee Experience (EX) = Customer Experience (CX)
Employee skills the BPM industry should invest in to accelerate the shift
Appetite for Change Problem-solving

Readiness and ability to embrace change The thinking and processes behind finding solutions to difficult
or complex objectives
Digital Fluency
Ability to drive interplay between business and technology
Social Influence
Having an impact on others in the organisation, and displaying
Initiative energy and leadership
Readiness and ability to self-direct, self-motivate, and turn
ideas into action
Interaction Values
The ability to constructively navigate feelings and approaches Guiding principles in attitudes and actions
with oneself and others

Authors
Phil Fersht Melissa O’Brien

CEO & Chief Analyst Executive Research Leader
Saurabh Gupta Pankaj M Kwatra

President Research & Advisory Consulting Leader

Contributors
Achyuta Ghosh Sukanya Roy

Head Research Head BPM & GCC Initiatives
Nirmala Balakrishnan Hitesh Achra

Practice Lead Manager GCC & BPM Initiatives

About
Insight. Inspiration. Impact. NASSCOM is the industry association for the technology sector in India. A not-for-profit
organization funded by the industry, its objective is to build a growth led and sustainable
HFS is a unique analyst organization that combines deep visionary expertise with rapid
technology and business services sector in the country with over 3,000 members.
demand side analysis of the Global 2000. Its outlook for the future is admired across the
NASSCOM Insights is the in-house research and analytics arm of NASSCOM generating
global technology and business operations industries. Its analysts are respected for their no-
insights and driving thought leadership for today’s business leaders and entrepreneurs to
nonsense insights based on demand side data and engagements with industry practitioners.
strengthen India’s position as a hub for digital technologies and innovation.
HFS Research introduced the world to terms such as “RPA” (Robotic Process Automation)
in 2012 and more recently, the HFS OneOfficeTM. The HFS mission is to provide visionary
insight into the major innovations impacting business operations such as Automation,
Artificial Intelligence, Blockchain, Internet of Things, Digital Business Models and Smart www.nasscom.in research@nasscom.in
Analytics.
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Disclaimer
The information contained herein has been obtained from sources believed to be reliable. NASSCOM and its advisors & service providers
disclaims all warranties as to the accuracy, completeness or adequacy of such information. NASSCOM and its advisors & service providers
shall have no liability for errors, omissions or inadequacies in the information contained herein, or for interpretations thereof. The material or
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taking any action that might affect anybody’s personal finances or business, they should consult a qualified professional adviser.
Use or reference of companies/third parties in the report is merely for the purpose of exemplifying the trends in the industry and that no bias is
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The Evolution of BPM Services |

Cost, Outcomes and Growth

© 2022 | HFS Research 1

© 2022 | HFS Research 2

© 2022 | HFS Research 3

19 Cost, Outcomes, Growth – The Evolution of BPM Services

25 BPM solutions to drive enterprise growth & innovation

India expected to continue to be the bellwether for

It’s time to accelerate the shift. Top 3

© 2022 | HFS Research 4

We address the following in our study:

© 2022 | HFS Research 5

% respondents % respondents % respondents Capital markets (shares, securities, secondary markets)

Client perspectives Service provider perspectives

© 2022 | HFS Research 6

The Evolution of BPM Services

Stage 2: Business Outcomes • Finding new sources of value

© 2022 | HFS Research 8

Soft skills (Communication,

© 2022 | HFS Research 10

India expected to continue to be the bellwether for BPM industry

It’s time to accelerate the shift. Top 3 recommendations

© 2022 | HFS Research 12

29% 29% 27%

Digitalized processes to drive End-to-end organizational alignment Collaboration across likeminded

Current innovation focus Expected innovation focus in 2 years

© 2022 | HFS Research 13

Rank 1 Rank 2 Rank 3

© 2022 | HFS Research 14

© 2022 | HFS Research 15

Weighted average = 11%

© 2022 | HFS Research 16

Don’t know Don’t know

© 2022 | HFS Research 17

© 2022 | HFS Research 18

© 2022 | HFS Research 19

© 2022 | HFS Research 20

Introduce new technologies / platforms 9% 10% 7%

Support new products/services innovation 7% 7% 9%

Generate data to improve operations / efficiency 9% 5% 8%

Support fraud, risk, compliance and regulatory management 7% 7% 8%

Generate insights/data to drive growth 5% 9% 7%

Help automate existing processes 6% 7% 7%

Supports a more agile/scaleable workforce (e.g. seasonal fluctuations, M&A) 7% 7% 6%

Improve client satisfaction Score 9% 5% 5%

Take advantage of their Partner Enterprise Transformation Programs 8% 6% 6%

Reduce employee turnover 5% 5% 6%

Reimagine legacy processes 5% 4% 7%

Provide scare skills / talent 4% 6% 6%

Greater Sales Conversion 5% 5% 5%

© 2022 | HFS Research 21

Service provider perspective

© 2022 | HFS Research 22

Stage 2: Business Outcomes • Finding new sources of value

© 2022 | HFS Research 23

Service provider perspective

© 2022 | HFS Research 24

© 2022 | HFS Research 25

Service provider perspective

© 2022 | HFS Research 26

BPM services today BPM services in 2-3 years

© 2022 | HFS Research 27

15% 15% 14% 14%