Everest sees services biz slowing to 4-6%

Apr 7, 2020
US IT research and advisory Everest Group said the global services revenue (excluding the domestic market) is expected to touch $221-$226 billion in 2020, growing at 4%-6%, the slowest in the last five years, exacerbated by slowdown due to the coronavirus outbreak and the likelihood of many economies slipping into recession. The growth was 5-7% in 2019, and 6-8% in 2018.
In the report ‘2020 locations predictions: Confronting the impending slowdown,’ Everest says India, which accounts for 40-45% share of the global services (IT and BPM) talent pool, is likely to see progress, albeit at a slower rate, weighed down by the Covid-19 impact, lower growth forecasts, tight credit policies, and slow economic reforms. “Enterprises will place higher emphasis on process improvements, delivery optimisation, and implementation of large-scale automation projects in the next 1-2 years from their India centres,” said the report’s authors Parul Jain, Hrishi Raj and Rohan Kapoor.
The Philippines, the world’s biggest provider of business process services, will continue its dominance in that space, the report said. But the growth is expected to slow across the IT-BPM industry, given decreasing demand for traditional services due to digitalisation and expected increase in delivery costs due to rationalisation of incentives by the government.

Growth in the Eurozone is expected to be sluggish mainly due to the impact of the Covid-19 breakout and looming financial concerns. But within the zone, locations in Central and Eastern Europe (CEE) are expected to witness growth for global services, driven by skills availability, proximity to customers in Western Europe, increased regulatory oversight driving the need for nearshore support, and demand for multilingual support, the report said.

Poland, whose share of global services talent pool is 3-5%, is expected to continue to do complex BPM and IT services, retaining its position as the third-largest location (by headcount) in the world for global services delivery. The Czech Republic, Hungary, and Slovakia are expected to witness moderate growth, given the constraints around talent sustainability, higher costs than other CEE locations, and rising competitive intensity in tier-1 locations (Prague, Budapest, and Bratislava).

Dublin will be largely leveraged by companies for their EMEA headquarters and regional CoEs (centres of excellence), and Israel will continue to see higher growth for next-generation services for AI, blockchain, big data, cloud and IoT, Everest said. Latin America and the Caribbean are expected to continue their moderate growth, underpinned by environment-related challenges, political instability within the region, and slow momentum of investment.

The United States, the report said, will continue to lead the onshore global services delivery market, although the growth is likely to be slower than previous years, especially due to the anticipated impact from Covid-19. Canada, it said, will witness high growth as a result of higher government investment to attract foreign investors as well as the uncertainty around the US government policies.