HAMPTON, N.H. – IT service providers continue to consolidate headcount across regions while seeking to optimize global delivery operations though automation. Technology Business Research’s semiannual Global Delivery Benchmark documents vendor performance, attrition and utilization rates, as well as market, growth and profit drivers across 14 of the largest systems integrators (such as IBM, HP).

This new research provides insights to how increased adoption of cloud-based services delivery and solutions with embedded analytics has compelled vendors to pursue selective hiring with an emphasis on best-of-breed cybersecurity engineers as well as data scientists and sociologists, which will enable systems integragtors (SIs) to better position their business. As this model becomes more widespread and labor arbitrage runs its course as a main lever for service delivery, the research helps clients to create business models that enable them to generate nonlinear growth through automation and cloud delivery.

“Large SI vendors with established global delivery networks are leveraging industrialized delivery models to improve profits by using automation to offset the cost of retaining highly skilled talent,” said Bozhidar Hristov, lead analyst on TBR’s Global Delivery Benchmark. “On the other hand, India-centric vendors are betting on hiring freshers with STEM skills whom they groom through accelerated training programs and deploy as needed to maintain a lean cost structure. Vendors that aren’t aligning to this model in an aggressive way will be left behind.”

According to TBR’s research, attrition is emerging as the biggest threat to vendors’ profits as a better economic climate and demand for cloud talent allow staff to switch jobs. For example, SIs with support and maintenance portfolios, such as HP, IBM, Dell and T-Systems, enacted headcount reduction programs to eliminate redundant positions, which created apprehension among employees and led to an increase in attrition. The expectation is that vendors will leverage analytics-based tools to measure employee satisfaction and implement talent-specific incentive programs to stabilize attrition.

Profitability improvement will depend on vendors’ ability to attain highly skilled workers and/or train freshers at or ahead of the pace of evolution of the IT services market. Cultivating a broad skills pool will improve vendors’ abilities to understand and address clients’ business outcomes in creative and holistic ways, particularly in data analytics, where wide-ranging knowledge of language and consumer behavior improves the precision of algorithms.

While sustaining a global delivery model is becoming table stakes for vendors to maintain competitiveness, the increased commoditization of labor arbitrage is compelling vendors to invest in IP-based solutions. This enables them to bundle industry-oriented applications and infrastructure services, helping capture IT transformational opportunities without additional hiring.

The Global Delivery Benchmark offers a four-year view of how the market has shifted and analysis of which vendors are improving and which are lagging behind as customers require global support and maintain cost savings. Vendors will need this research to create winning strategies, and end users will benefit from this research to select vendors that have invested in the capabilities needed to meet their demands.

Analysts will present the webinar “Semiannual Global Delivery Benchmark Update: How is cloud disrupting vendors’ hiring strategies?” on November 18 at 1 p.m. EST to share high-level findings from this research. To register for the event, click here.

(Note: For more information about the Global Delivery Benchmark, please contact Alison Crawford alison.crawford@tbri.com, or James McIlroy or mcilroy@tbri.com.)

(C) TBR