Global digital outsourcing opportunity for Service Providers in the T&H vertical is pegged at $1.6 Bn in 2018 and is expected to grow to $4 Bn by 2022 at 20% CAGR
BANGALORE, December 24, 2018 : Zinnov, a global management and strategy consulting firm, today released its global rankings of Service Providers in the Travel & Hospitality segment for 2018, titled, ‘Zinnov Zones for Digital Services in Travel & Hospitality – 2018’. The study analyzed the Global Digital Services landscape across the Travel & Hospitality (T&H) industry and evaluated vendors serving global travel & hospitality enterprises. The aim is to identify the top Service Providers in the digital domain. Zinnov defines digital investments as spending on engineering of digital products and applications, digital infrastructure, and digital managed services aligned to modern technologies such as AI/ML, robotics, IoT, etc., to achieve better customer experience, drive higher operational efficiencies, and build new digital products.
Zinnov estimates that T&H companies worldwide will spend over $22 Bn on digital in 2018 and the digital spending is likely to increase at a CAGR of 21%, to touch $57 Bn by 2023. The industry continues to see large investments in connected travel experiences for customers through initiatives such as new age design and data-led personalization, powered by AI and ML. Large global travel and hospitality organizations are building multi-faceted partner ecosystems to design, create, and deliver delightful experiences for their customers.
Zinnov’s ranking analyzed 9 global Digital Service Providers on their ‘digital prowess’ and ‘scalability’ with regards to the T&H vertical, to position them in Zinnov Zones (‘Nurture Zone,’ ‘Breakout Zone,’ ‘Execution Zone,’ and ‘Leadership Zone’). Apart from the overall ratings on T&H Digital Services, the analysis also provides a relative positioning of Service Providers across 3 key industry segments – Planning & Booking, Travel, and Hospitality – and 3 service lines – Digital Consulting, Digital Experience & Design, and Data Management & Insights. Mindtree, Wipro, NIIT Technologies, HCL, and EPAM have been identified as leaders for overall digital services in T&H.
Zinnov also estimated that outsourced digital services will account for 14% of the total spending on T&H digital services in 2018, amounting to $1.6 Bn. This is expected to touch ~$4 Bn by 2023 at a CAGR of 20%. Of this $1.6 Bn outsourced digital services market, the Travel segment accounts for 65% share, followed by Hospitality at 15% share. Other sub-segments include Planning & Booking, Urban Transportation, and Travel Intermediaries. In terms of the geographical spread, North America leads the demand with 47% market share, followed by Europe at 40%.
Given the large opportunity for digital services in the T&H vertical, Service Providers are investing in building deep capabilities aligned to the segment. Top Service Providers have set up T&H-focused CoEs and innovation labs and are leveraging the external technology ecosystem through partnerships with platform/tool companies as well as engagements with T&H-focused start-ups to build industry-specific digital solutions. They are also actively investing in digital talent and are driving various innovative initiatives such as setting up in-house academies, offering certification courses, and partnering with academic and research institutions.
Speaking at the launch of the report, Praveen Bhadada, Partner & Practice Head, Digital Transformation, Zinnov said, “Over the last 12-18 months, T&H has been experiencing a large volume of digital investments with increasing deal sizes. More than 20% of the digital deals in this space are over $5 Mn in value. Digital investments are majorly targeted towards areas such as personalized and connected travel experience and enhancement of workforce efficiency. We are witnessing the convergence of multiple digital technologies – AI, IoT, and RPA to deliver these use cases. Leading Service Providers focused on the segment are investing in T&H-specific IPs, leveraging industry partnerships, and engaging with differentiated engagement models to outpace the competition.”