Field Service productivity is impacted by SLAs and the underlying support model. The primary driver for productivity is strong emphasis on ticket elimination and “shift-left” of the issues. Productivity can be increased by reducing field service engineers’ intervention. In order to achieve this, service providers can consider strengthening the L1/L1.5 Support with tenured resources to maximize resolution at that level. Furthermore, providers can also consider leveraging following mechanisms to enhance efficiency:
- Leveraging Inter vPro or similar solutions for remote troubleshooting
- Tech Café
- Vending machine for peripherals
- Virtual kiosk/ Tech bar
- AR/VR technologies
- Digilocker
Typically, first gen outsourcing deals / legacy environments have calls and emails as predominant contact channel and proportion of calls and emails could potentially exceed 80-90% of the contacts. However, as service providers rationalize the workflow and implement chat bot and other tools, proportion of calls and emails gets reduced in favour of other channels e.g., chat and web with lower cost to serve. In an end state, service providers may have 60-75% of contact volume by web and chat and remaining 25%-40% by phone calls and emails.
Our advice to enterprises and service providers is to leverage/ contextualize the benchmarks depending upon scope of services and not to have pre-emptive bias for or against any industry. Simply speaking, if scope is a horizontal such as a multi-tower infrastructure deal with its own baselines and environment maturity, then that should drive the benchmark reference set agnostic of industry. However, if we are talking about industry specific scope e.g., payer platform or trading platform support, we’ll need to consider industry specific benchmarks.
Productivity gains and automation impact over the deal term is driven by environmental maturity.. To assess the potential productivity gains, a detailed analysis of number and nature of issues in the current environment is required. We would typically expect overall productivity gains as well as speed of realizing productivity gains to be higher in a legacy (1st time outsourcing) environment v/s 2nd/ 3rd Generation outsourcing deals.
The heated demand is leading to a drive for talent thereby heating up the salaries in onshore and offshore geographies – thereby increasing the cost to serve for Consulting service providers by as much as 10%-20% on a fully-loaded op-cost per FTE basis depending on the underlying technology type and resource seniority. However, enterprises remain cautious and price sensitive on consulting spend and >80% of consulting engagements have some form or fashion of line-of-sight into tangible outcomes / impact.
Currently, the preferred pricing models for S&C are fixed fee based for clearly ring-fenced scope, outcomes, timelines, and with contractual flexibility to pause and/or terminate. Enterprises are also open to risk-gain share mechanisms BUT should be tread with utmost clarity and thought on scope due-diligence, underlying assumptions, dependencies, and outcome versus risk thresholds, else can be detrimental to an already diminishing margin turf for service providers.
Since the cost to serve for S&C is expected to remain elevated in the near to medium term, this segment of business is expected to see margin pressure. A negative margin scenario is only to be expected if providers do not push for a well-defined scope or outcomes, do not size/solution the effort and staffing accurately, or undercut strategically or competitively for downstream execution-led gains. Opportunistically leveraging the perceived ‘premium and niche skills’ market can offer consulting providers with some margin-cushion at a deal-level.