Trends in Outsourcing in the Financial Services Industry ... · services industry, before focusing on key trends in the outsourcing space and then continue with a number of special

Trends in Outsourcing in the Financial Services Industry 2009 – 2013:

What is next for the financial services support model?

Elix-IRR: Trends in Outsourcing in the Financial Services Industry 2013 2 | Page

© Copyright 2013 Elix-IRR Partners LLP

Elix-IRR: Trends in Outsourcing in the Financial Services Industry 2013

• Global financial services overview

• Global outsourcing market overview

• Financial services outsourcing market overview

• Emerging market: BRIC economic update and impact on outsourcing

• Foreword

• Executive summary

• BPO performance in financial services: market trends

• BPO performance in financial services: by domain

• BPO performance in financial services: by geography

Intr

oduction

Mark

et C

onte

xt

BP

O T

rends

ITO

Tre

nds

Market Context

Introduction

• ITO performance in financial services: market trends

• ITO performance in financial services: by domain

• ITO performance in financial services: by geography

BPO Trends Analysis

Featu

res

• Regulation

• Outsourcing in the future retail bank

• Moving up the value chain

• Challenging times for the life and pensions industry

• New destinations for outsourcing

•

Features Review

Conclu

sio

n • Afterword

• Elix-IRR’s services

• Appendix – top deals 2012

Conclusion

ITO Trends Analysis

5

9

19

28

38

64

3 | Page




Stephen Newton

Founder and

Managing Partner

of Elix-IRR

“

”

I am very excited to announce the

publication of this year’s Trends in

Outsourcing in the Financial Services

Industry report, following the success

of previous reports.

There is an unprecedented level of

regulatory and investor pressure on

financial service institutions and this

year we focus on how the industry is

responding to it.

It remains to be seen if the post

financial crisis era has started as we

see RoE performance begin to

rebound.

This year’s report contains analysis of

outsourcing market data provided by

NelsonHall, a market leading

outsourcing research house.

We provide a brief review of the

current performance of the financial

services industry, before focusing on

key trends in the outsourcing space

and then continue with a number of

special features around the future of

the outsourcing industry.

I know that our clients, and the

industry more broadly, value the

independent analysis that we bring in

these reports and I hope this year will

be no exception.

Foreword

Elix-IRR Trends in Outsourcing in the Financial Services Industry 2013

Despite the return to growth in the financial services

industry in the year since we published our last report,

the new “regulatory reality” has led banks to recognise

that even as the economy recovers and performance

improves, financial services institutions will need to

work much harder to achieve the same returns they

enjoyed before the crisis. The increase in required

regulatory capital, and the subsequent need to

implement more robust processes and transparent

governance is driving institutions towards cost

reduction strategies that are both innovative and

sustainable.

In addition, financial services institutions have been put

under increased pressure by the growing expectations

of customers. Customers increasingly expect

unprecedented quality and availability of service and

transparency from financial institutions, a trend already

observed in other industries.

From a demand perspective this is driving changes in

the way financial services are looking at outsourcing as

part of the toolset to address these market changes:

• In their search for value, financial services

institutions are increasingly looking for services

which span the value chain whilst taking a multi-

sourcing approach as their maturity in managing

outsourced services grows

• Financial services institutions continue to see

outsourcing as a means of cutting costs, however

they are also looking for increased value aligned

with their long-term business strategies – including

new capabilities, reduced capital investments in

infrastructure and improved services

• The increasing demands on financial services

institutions from global regulators means third party

service providers will be expected to support their

customers by implementing greater transparency

and more robust control frameworks

Executive Summary

6 | Page Elix-IRR Trends in Outsourcing in the Financial Services Industry 2013



Against this backdrop, the global outsourcing sector

in financial services overall has continued to grow

modestly over the last four years and this growth is

forecast to accelerate. Behind these headline figures,

the major changes in the financial services sector are

starting to change the nature of outsourced services.

Our analysis reveals a fundamental blurring of

traditional definitions of outsourcing is making typical

industry classifications less and less relevant:

• Outsourcers are diversifying their approach and

seeking to build more innovative solutions that

align with their customers’ cost and value

agendas, including broadening services to

previously ‘core’ areas of financial services

activity such as mortgage and securities

processing

• In this context the provider landscape is

changing; bank-to-bank outsourcing agreements

on transaction processing which previously would

not have been considered as ‘outsourcing’, make

up some of the largest transactions in the

marketplace

• The traditional boundaries between BPO and ITO

are becoming blurred as service providers look to

provide integrated, end-to-end solutions for

clients – not just leverage wage arbitrage

• As financial institutions become more accepting

of new technologies such as cloud-based

infrastructure and software services, the need for

large, monolithic outsourcing solutions in this

space is diminishing

These trends have had a noticeable impact on the

sourcing behaviours of financial institutions. As a

result, new service providers are emerging, whilst

existing providers are adapting their service offerings

to respond to these trends.

Features in this year’s report

In addition to our market trend analysis, we have also

sought to provide a perspective on the challenges

the industry faces. In our Features section we

examine some of the key themes from our report in

greater depth:

1. What is the impact of changing regulation on

financial services sourcing models?

2. What will the impact of increased customer

expectations be on the sourcing behaviour of

retail banks?

3. How can transaction banks move up the value

chain and offer innovative outsourcing solutions

to help their clients cut costs?

4. How is the insurance industry using

outsourcing?

5. What alternative outsourcing destinations are

challenging traditional offshore locations?






Intr

oduction

Mark

et C

onte

xt

BP

O T

rends

ITO

Tre

nds

Market Context

Featu

res

Conclu

sio

n


Elix-IRR Trends in Outsourcing in the Financial Services Industry 2013 10 | Page

Figure 1. H1 2013 profit increase vs. H1 2012

Source: Published 2013 Interim Results and 2012 Annual Results, Elix-IRR analysis

Figure 2. 2013 Q1 RoE performance by selected global banks

0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200%

Lloyds Banking Group

Barclays

Bank of China

ICBC

HSBC

Standard Chartered

RBS

0% 2% 4% 6% 8% 10% 12% 14%

Barclays

Lloyds Banking Group

RBS

HSBC

BNP Paribas

Citigroup

Goldman Sachs

JP Morgan



Back to black

Whilst 2012 saw many global banks continue to

struggle against a backdrop of falling revenues

and stagnant RoE, results for the first half of 2013

suggest that a recovery, albeit a slow one, is

underway. Average RoE for the major US banks

has risen to over 14% in Q2 of 2013, while the top

four UK banks have seen average RoE lift to 9%

and pre-tax profits jump nearly 30% in H1 2013,

compared to the same period last year. However,

these numbers are still well below the pre-financial

crisis highs of more than 20% RoE.

Growth has been prompted, in part, by the

extensive financial stimulus programmes

instigated by major governments that pumped

billions into their respective economies. These

stimuli have contributed to the gradual emergence

of the UK and US from recession. Combined with

a period of relative stability in the Eurozone which

has allowed banks to focus on rebuilding their

balance sheets. Geography seems to be the key

determining factor in whether banks have been

able to achieve this, with European banks

criticised for being undercapitalised compared to

their US counterparts.

The insurance industry has also experienced

similar challenges, particularly the need to cut

costs and increase capital buffers. Whilst mature

markets have stabilised, consumer and business

spending remains sluggish. As a result insurers

continue to seek to trim costs, whilst chasing

opportunities in emerging markets.

Regulation

Regulation remains the key driver behind

business and operating model changes across the

industry, as new regulatory requirements increase

the cost of doing business and decrease the

profitability of previously lucrative activities.

Concurrently, the penalties for non-compliance

have increased: the top ten global banks recorded

operational risk losses of more than $25bn in

2012, practically all of which was recorded by five

banks (JP Morgan, Citi, Bank of America, HSBC

and Wells Fargo).

The regulatory environment continues to evolve.

The imminent implementation of AIFMD is

concerning the buy-side; MiFID II is occupying

sell-side participants; Solvency II, despite

continued delays in its implementation, will still

impact the insurance industry. Substantially

increased capital requirements are also enduring,

which continues to impact revenues and RoE

through a reduction in leverage across the

industry. This is driving the long-term need across

the industry to reduce fixed costs. Financial

services institutions that recognise the new rules

of the game will continue to focus on what they

can control, namely cost. (for more detail see our

Features section)

Same game, new rules

A paradigm shift within financial services has

occurred. Governments and central banks will

continue to set the agenda for financial services

institutions as they seek to remould the industry.

The focus on increasing regulatory capital will

result in a long-term focus on finding sustainable

ways to reduce fixed costs. This presents an

opportunity to service providers who can

effectively align their offerings behind this

objective.

Global financial services A fragile recovery

11 | Page

“The performance of financial services institutions is starting to

rebound, but capital challenges remain and support services

continue to be under cost pressure”


ITO $189bn

35%

BPO $347bn

65%

Americas $277bn

52%

EMEA $178bn

33%

Asia Pacific $80bn 15%

12 | Page

Figure 3. Overall outsourcing market performance 2009-2012

Figure 4. Overall outsourcing market 2012

299 311 328 347

182 181 185

189

-

100

200

300

400

500

600

2009 2010 2011 2012

Ove

rall

ou

tso

urc

ing

ma

rke

t ($

bn

)

ITO BPO

Notes: - Please note the change in data source from the 2012 report to Nelson Hall

- Outsourcing contract data is from publicly available information

Sources: NelsonHall data, Elix-IRR analysis

i. BPO / ITO ii. Region



Global outsourcing market

The overall global outsourcing market continues to

enjoy steady growth. The year-on-year gains in

the overall market observed in recent years are

set to continue in 2013. This is a good indicator

that confidence in the strength of the outsourcing

value proposition has been maintained throughout

the global economic crisis and ongoing recovery.

Key structural changes are driving this growth and

we have identified four key trends in the global

outsourcing market:

1. The labour arbitrage model is no longer the

only key driver

Every year, above-average inflation and resultant

increasing wages in established offshore

outsourcing destinations are driving costs

upwards and reducing potential cost savings.

Despite this, outsourcing continues to grow year-

on-year, demonstrating that cost is no longer

necessarily the primary driver. Organisations are

looking for:

• Flexibility and scalability of resources

• Guaranteed price, even if this is not

necessarily a lower price

• Higher levels of service and expertise

• Lower capital investment

2. New outsourcing destinations: rise in

nearshore and alternative lower cost

destinations

As the business model for offshoring has been

eroded by increasing wages and real estate costs

in mature locations such as India, outsourcers

have responded in two ways:

• Exploring alternative offshore destinations

that can deliver continued cost savings, for

example Sri Lanka or Colombia, instead of

traditional outsourcing destinations such as

India or the Philippines (see our Features

section for more analysis)

• Increasing automation is reducing the need

for large numbers of low skilled workers,

leading to nearshoring of outsourced services

to gain access to more highly skilled

workforces and better customer service

3. The rapidly evolving digital world is forcing

businesses to make a series of fundamental

changes to their operating models

Innovation and technology are disrupting the way

outsourcers provide and sell their services:

• Online is becoming the norm: this requires

companies to maintain multi-channel

solutions as customers move away from face-

to-face interactions (i.e. online banking)

• Greater demand for big data analytics to drive

revenue growth, cost reduction, and running

robust Customer Relationship Management

(CRM) systems

• Cloud applications and services are allowing

companies to buy based on usage and

eliminate large up front costs

4. Rise in stronger value propositions

Many of the “quick wins” or easy cost saving

opportunities have been exploited, especially in

mature markets where outsourcing is an

established solution. In response to various

challenges, the outsourcing industry is shifting

from a cost-focused industry to one that is defined

by higher value, better service and more

expertise. Responses include:

• Low cost providers operating on thin margins

can struggle to make the required

transformational changes. Working with

strategic partners is becoming more common

• Vertical integration in outsourcing can enable

greater value through deeper expertise in one

business unit. For example, many financial

services institutions struggling with the Dodd-

Frank Act are looking to outsource “vertically”

some of the required documentation and data

gathering

• The clear cut boundaries between BPO and

ITO are blurring as outsourcers provide

solutions that cover the entire end-to-end

value chain

Global outsourcing market Trends and performance

13 | Page


Americas $89bn 49%

EMEA $64bn 35%

Asia Pacific $29bn 16%

14 | Page

Figure 5. 2009-2012 total outsourcing market, by industry

35%

65%

2009 2010 2011 2012

Financial services spend

$182bn 34%

Other industry spend

$354bn 66%

170 170 176 182 190

198 207

217

0

50

100

150

200

250

2009 2010 2011 2012 2013 2014 2015 2016

Ove

rall

ou

tso

urc

ing

ma

rke

t ($

bn

)

Figure 6. Financial services outsourcing market performance 2009-2012, and forecast 2013-2016


0

10

20

30

40

50

60

70

80

90

100

2009 2010 2011 2012

Ou

tso

urc

ing

ma

rke

t ($

bn

)

Figure 8. Financial services outsourcing performance by region 2009-2012

1.6%

3.5%

CAGR

2009-12

3.3%

2012

0

20

40

60

80

100

120

140

160

180

200

2009 2010 2011 2012 2013 2014 2015 2016

Ou

tso

urc

ing

ma

rke

t ($

bn

)

Figure 7. Financial services outsourcing performance 2009-2012 and forecast 2013-2016 by BPO / ITO

3.2% / 5.2%

-0.2% / 1.5%

CAGR

2009-12 / 2012-16

BPO $143bn

78%

ITO $39bn 22%

2012

35%

65%

34%

66%



Financial services outsourcing market

Financial services outsourcing spend makes up

approximately 34% of the total outsourcing

market, and this proportion has remained

relatively consistent between 2009 and 2012 (see

figure 5). Whilst the non-financial services markets

have shown a small gain, the financial services

share of the global outsourcing market has

diminished slightly since 2009.

The financial services outsourcing market has

grown at 2% CAGR since 2009 (see figure 6),

driven by a need to cut costs and improve service

levels. This growth continues in response to

increased cost of regulatory compliance and

capital and increasing customer demands which

require further investment. Outsourcing continues

to offer a way to deal with the issue of cost, and at

the same time providers are getting creative with

the types of services they are offering their clients,

as we will explore further in this report.

As shown in figure 7, BPO accounts for 78% of

outsourcing in financial services and has shown

stronger growth than the ITO market between

2009 and 2012. BPO grew 3.2% over the last four

years (CAGR), whereas ITO was stagnant (0.2%

decline over four years), showing a real term

decline in sales. This trend is expected to continue

next year and forward to 2016. We see three key

trends driving the trends in financial services

outsourcing:

1. A key driver for outsourcing remains cost

reduction

As revenue pressures resulting from regulation

increase, there is a continued focus on

outsourcing to reduce costs to protect margins.

However, financial service providers are looking

for more strategic relationships to deliver

enhanced value through any outsourcing, given

that potential labour arbitrage using offshore

resources has fallen away in recent years.

2. Pure ITO is falling out of favour

Across the financial services industry pure ITO is

in real term decline, for both value and number of

deals signed. The ITO market is increasingly

saturated, and many companies are looking to

manage their existing deals more effectively rather

than commit to new arrangements. Furthermore,

CIOs are looking to refocus their use of ITO

service providers, having been ultimately

disappointed with the success of large scale

“transformational” outsourcing deals, and the

market is seeing an increase in the appetite for

cloud-based solutions.

As an alternative to large transformational deals,

buyers are looking to use more bespoke

providers, combine services into industry verticals

with BPO elements, or move ITO spending

towards outcome-based pricing (enabled by cloud

computing and managed service solutions). The

knock-on effect is the reduced number of “mega-

deals” and the impact on the total market size.

Additionally, though there is very little data on the

subject, we believe that there has been a

concurrent increase in cloud-enabled BPO.

This fall out of favour of pure ITO in financial

services is evidenced by its share of the market

compared to BPO. In the overall outsourcing

market, ITO accounts for 65% of the market size

(see figure 4i). However, in financial services, the

ITO market share is significantly smaller, at 22%

(see figure 7).

3. The outsourcing industry is diversifying

Financial service providers are outsourcing a

wider range of services, including specific

business areas such as HR and procurement (see

BPO Trends Analysis for further discussion). This

trend is being driven by a desire for more strategic

arrangements (including the integrated use of IT

and BPO services), and the search for further

value in areas not traditionally outsourced. Service

providers are responding to this by seeking to

develop broader end-to-end services, whilst niche

entrants with specific expertise are also gaining

ground. We expect outsourcing to play a

continuing, and growing role, in financial services,

and for outsourcers to work more widely across

the value chain and in an increasingly holistic

manner.

Financial services outsourcing market Trends and performance

15 | Page


BRICs, no mortar?

The BRIC countries have experienced fluctuations

in fortunes over recent years. Following a decade

of sustained high growth, high inflation and

improving living standards, events over the past

year have led to a more negative outlook for BRIC

countries (see figure 10). This began with a rapid,

but controlled, slowdown in the Chinese economy,

and a marked decline in Brazilian, Indian and

Russian growth.

In China this has been driven by a number of

factors, notably, overcapacity and saturation in the

export market, an unsustainable credit fuelled

construction bubble and rising wages as China’s

demographic dividend peters out. The slowdown

in Chinese growth has led to a significant knock-

on impact on the commodities driven economies

of Russia and Brazil, who have also suffered from

domestic political discontent.

This trend has been further accelerated by the

prospect of an end to quantitative easing in the

US. This has led investors to reassess, in the

short term, their investments in emerging markets

and subsequently withdraw capital. This is largely

due to the short term challenges in these

economies, such as political instability, high

inflation, corruption and the need for structural

reforms.

India in particular has suffered over the past year

as investors have woken up to the realisation that

inflation has outstripped growth by 4-5 percentage

points, whilst the economy remains unreformed,

leading to, amongst other things, aging

infrastructure, sclerotic job market, a weak

banking sector and a high current account deficit.

Whilst these factors will have an impact on the

growth trajectory of these countries, it is also

impacting their outsourcing industries.

Emerging markets outsourcing overview

Most of the emerging economies still provide

comparative advantage in wage arbitrage,

however this is only diminishing over time as

markets mature. Competitors able to offer greater

wage arbitrage over established players have

entered the market. Nonetheless, whilst economic

needs are maturing, the BRIC countries are still

supplying outsourced services rather than

demanding them. Mature countries are moving up

the value chain and are able to compete on quality

of service and proposition, rather than just cost.

However, it is worth noting that financial services

institutions are still located more predominately in

high-cost locations compared to their service

provider counterparts (see figure 9). There is

therefore still opportunities for savings from labour

arbitrage.

Overview of key offshore destinations

India: India remains the largest hub of offshored

financial services BPO centres in the world and

continues to grow, supported by local and

international service providers. Large Indian

service providers are also attempting to expand

into Europe to provide nearshore services in

countries like Poland and Bulgaria, with some

success. However, in the past few years several

alternative offshore destinations have shown

strong growth in the market, highlighting that

India’s position is far from assured.

Emerging markets Economic update and impact on outsourcing

16 | Page

“Political stability has increased the attractiveness for outsourcing

in several countries amid rising costs in more traditional markets”



China: China has a well-educated workforce and

is providing a growing range of services to the

global banking community, from a complete IT

outsource service from Deutsche Bank to an

IBM/Siemens joint venture, to the creation of

several shared service centres in regional hubs

like Shanghai and Shenzhen. This is only likely to

increase as the financial services sector continues

to mature and looks for the kind of productive

capacity and scale that China can offer.

Philippines: Although it can not compete with

India in terms of population size, the Philippines is

a popular outsourcing destination. The Economist

estimates that BPO revenues totalled $11bn in

2012; around 5% of the country’s GDP. This

revenue is created predominately by contact

centres, with the English language skills and

neutral accent making the labour force an

attractive proposition. Representative of this is the

decision by many Indian providers, such as

Infosys and Wipro to open operations there.

Alternative outsourcing and offshoring

locations

Whilst the BRIC nations find themselves further

along the outsourcing maturity curve, there are

several other emerging candidates for the location

of offshored hubs and the provision of outsourced

services. These new destinations may provide the

catalyst for outsourcing provider growth over the

next few years, rather than the established BRIC

economies amongst emerging markets.

Discussion of two alternative destinations; Sri

Lanka and Colombia, can be found in the

Features section.

.

17 | Page

0

2

4

6

8

10

12

Brazil Russia India China OECD

% G

DP

gro

wth

% GDP growth 2010 % GDP growth 2013

Figure 10. GDP growth in the BRIC economies

0% 20% 40% 60% 80% 100%

Accenture

Wipro

Capgemini

Infosys

IBM

TCS

FS supportfunctions

Low Cost High Cost

Figure 9. Use of low cost versus high cost locations by

financial services institutions and service providers

Source: Elix-IRR survey results 2013 Source: The Economist





Intr

oduction

Mark

et C

onte

xt

BP

O T

rends

ITO

Tre

nds

BPO Trends Analysis

Featu

res

Conclu

sio

n



107 112 117 123

30 32

34 36 14

15 16

17

93 93 98 102

25 25 27

28 12 12

12 13

0

20

40

60

80

100

120

140

160

180

200

2009 2010 2011 2012 2013 2014 2015 2016

Ma

rke

t s

ize

($

bn

)

Insurance

Support services

Bankingoperations

Figure 11. Global financial services BPO market size 2009-2012, forecast 2013-2016, by domain


20 | Page

51 56 57 47

-

20

40

60

80

100

120

-

20

40

60

80

2009 2010 2011 2012

Figure 12. Financial services BPO average contract value and number of deals signed 2009-2012

Ave

rag

e c

on

tra

ct

va

lue

($

m)

Nu

mb

er o

f de

als

sig

ne

d

Number

of deals

signed



Financial services BPO market

The global financial services BPO market has

continued to recover from the effects of the 2008

financial crisis and European sovereign debt

crisis. Growth from 2011 to 2012 was at a four

year high at 4.5% (see figure 11).

The 2012 average contract value was the lowest

for four years, but the number of deals signed

increased (see figure 12), suggesting a preference

for smaller, more focused deals or more flexible

shorter term arrangements than previously.

Opinion is split as to whether this reflects risk

aversion post-crisis or the greater maturity of

financial services companies outsourcing

capabilities, leading to more ‘multi-sourcing’ or

‘best-sourcing’ approaches.

There are three key factors driving continued BPO

growth.

1.Return to growth in financial services, but a

continued desire to cut costs

The return to growth is driving the demand for

banking back office processes such as payments

or securities processing. These highly scalable

processes continue to be required by all

institutions and demand is directly linked to an

increase in transaction volume in the financial

services market, with certainty of pricing a

secondary driver.

Despite the economic recovery and the return to

growth, banks are continuing to look to BPO as a

tool to reduce cost. As a result BPO is forecast to

grow at the accelerated pace of 5% CAGR 2012-

2016 / 23% total growth (see figure 11).

2. BPO providers must be compliant with new

regulations

The increasing complexity of global regulation

shows no signs of abating. This is compounded by

the on-going public discontent at the financial

services industry, driving politicians to ensure

criminal sanctions are imposed as a penalty for

the failure to meet accountability obligations. As a

result financial services institutions will demand

more from their vendors. BPO service providers

will have to prove they can comply to increasingly

complex regulations in order to win and maintain

business.

Although accountability will remain with financial

institutions, in the medium-term we will continue to

see direct interest from regulators in service

providers themselves. As traditional organisational

boundaries give way to operating models enabled

by a number of diverse providers, regulators will

deeply probe each and every aspect of the

industry value chain.

3. BPO growth continues to be driven by

widening scope of activities

Financial services institutions are increasing the

scope of activities that they can outsource to

enable them to focus on their core customer

propositions. There has been strong growth in

“non-traditional” areas of outsourcing such as

procurement and risk, and in addition traditional

ITO services are being bundled into BPO deals

using cloud technologies. However, as BPO

providers expand their service offerings into non-

traditional services, they will increasingly fall under

the regulatory spotlight.

BPO performance in financial services Market trends

“Financial services institutions are increasing the scope of activities that they can outsource to enable them to focus on their core customer propositions. “


Figure 13. Financial services BPO market by domain 2012

Figure 14. Banking BPO market 2009-2012, forecast 2013-2016

0

2

4

6

8

10

12

2009 2010 2011 2012 2013 2014 2015 2016

Ma

rke

t S

ize

($

bn

)

Figure 15. Insurance BPO market 2009-2012, forecast 2013-2016

Figure 16. Support services BPO 2009-2012, forecast 2013-2016

$10bn

$8bn

$7bn

$3bn $1bn

$0.1bn Customer ManagementServicesDocument management

HR outsourcing

F&A outsourcing

KPO

Procurement

$9bn

$4bn Property & Casualty BPO

Life BPO

Total: $143bn

Banking BPO $102bn

71%

Support services BPO

$28bn 20%

Insurance BPO

$13bn 9%

$49bn

$34bn

$13bn $6bn

Securities processing

Payment processing

Mortgage processing

Core banking*

0

10

20

30

40

50

60

70

2009 2010 2011 2012 2013 2014 2015 2016

Ma

rke

t S

ize

($

bn

)

0

2

4

6

8

10

12

14

2009 2010 2011 2012 2013 2014 2015 2016

Ma

rke

t S

ize

($

bn

)


* Note: Core Banking BPO is defined as the outsourcing of core account administration in support of deposit services, client data services (CIF), general

ledger services, loan services, and reporting services. However, outsourcing of account administration services in support of mortgage processing,

payments processing, securities processing, and channel management services are excluded

22 | Page

2012

2012

2012

Total CAGR

2009-2012

3.1%

Total CAGR

2012-2016

4.7%

Total CAGR

2009-2012

2.5%

Total CAGR

2012-2016

7.2%

Total CAGR

2009-2012

4.2%

Total CAGR

2012-2016

6.3%



Banking

Financial services BPO spend remains dominated

by domain-specific processing services (see figure

13).

Securities processing forms the largest proportion

of the key services we analysed (47% in 2012),

followed closely by payments processing (34% in

2012, see figure 14). Securities processors are

seeing an uplift now that markets are recovering

and trade volumes are increasing. Services have

become increasingly commoditised and providers

are working harder to improve their processes and

reduce their own costs. Consequently securities

processing is seeing significant consolidation, and

the business case for outsourcing has improved.

However, this sector is still dominated by the

transaction banks, not by traditional ‘outsourcers’.

As such large transaction banks are now amongst

the top BPO providers (this year Citi, BNY Mellon

and State Street ranked 3rd, 5th and 7th by value of

deals signed respectively, see BPO contract 2012

snapshot for further details).

The payments space is seeing significant

innovation and change, with electronic payment

methods (contactless, mobile and online) gaining

momentum. The demand for activities servicing

credit and debit card customers will continue to

increase, driving the case for outsourcing. For

example, three of the top ten global banking BPO

deals, with a combined value of $245m, were

signed with TSYS (by Bank of America, RBS, and

BancorpSouth respectively) for services for credit

and debit card processing, which also included

statement processing, card production, and

settlement (see BPO contract 2012 snapshot for

further details).

Mortgage processing is showing signs of real-term

growth again as the global housing market begins

to pick up, led by a recovery in prices in the US

(figure 14). The post-mortem following the

bursting of the US housing bubble has had a

major impact on mortgage processing, focusing

significant regulatory attention on this area as

governments seek to prevent irresponsible future

lending practices.

A swathe of new regulation in this area affects the

third parties who are accountable to the

institutions that they service (particularly appraisal

management companies and title underwriters).

Dodd Frank, for example, has instituted

unprecedented laws regarding consumer

protection which affect not only the relationships

between third party providers and their clients, but

also the internal processes and controls that they

need to implement.

Insurance

The insurance BPO market returned to growth in

2012, having declined by 3% in 2011 (see figure

11). Growth was driven in part by mega-deals in

life and pensions, the top five deals accounting for

24% of the total value of all insurance BPO deals

in 2012 (see Appendix for further details). These

deals are being driven largely by a desire to

minimise the cost of regulatory compliance and

capital increases.

Outsourcing in Property and Casualty (P&C)

processing suffered in 2011 but returned to 4%

growth in 2012, and the market is forecast to pick

up from 2013 to CAGR 5% between 2013-2016

(see figure 15).

Life insurance BPO has performed well since

2009, growing with 6.0% CAGR over the 4 years,

and is also forecasting strong growth at 9.8%

CAGR through 2013-16 (see figure 15). Across

the market we are seeing insurers increasingly

look to service providers to remove complexity

from their businesses, allowing them to focus on

their core business and prospects for growth in

emerging markets.

Life and pensions firms are waking up to the

costly burden of policy administration, particularly

of “closed books”. This is a key driver behind

outsourcing, as the largest deal this year shows.

Diligenta, a subsidiary of TCS, will administer 3.2

million Friends Life policies in the UK using the

TYSCS BaNCS system. The contract is worth

£1.37bn ($2.2bn) over 15 years.

BPO performance in financial services By domain

23 | Page


Regulation will continue to be a key driver for

outsourcing as demands for increased capital,

greater risk management, control systems and

governance drive up costs and reduce margins.

As a result insurers will continue to look to

outsource non-critical and costly support services,

though regulators are also turning their attention

to the risk borne by outsourcing arrangements

may constrain future growth. For example in Hong

Kong, the Office of the Commissioner of

Insurance (OCI), has recently introduced

requirements for insurers to obtain prior approval

from the OCI before entering into any outsourcing

contract.

Notably, within insurance we continue to see the

traditional boundaries of BPO being blurred as

insurers outsource further up the value chain; with

firms such as Scottish Widows outsourcing large

parts of their asset management functions,

handing over their assets to third party managers.

Currently 6.6% of assets are managed externally

but this is forecast to increase to 8.9% by 2017.

This highlights how the boundaries of BPO are

increasingly being stretched.

Support services

The mainstay of BPO in many industries, support

services BPO remains a small fraction of the

market in financial services but continues to grow

at a significantly higher rate: 5% last year, and

with a CAGR of 4.2% between 2009-2012 (see

figure 11).

Growth is being driven largely by an increase in

three key areas: Customer Management Services

(CMS), document management and HR

outsourcing which collectively comprise 86% of

support services BPO. These are forecast to

continue to drive growth up to 2016.

CMS outsourcing is being driven by two key

factors. The first is increasing pressure on non-

branch customer interaction points, as customer

services move away from the branch. This has

been driven in the UK in part by a growth in

complaints regarding PPI mis-selling, which is

driving banks to increase capacity. The second

factor is an increasing desire to enhance and

maximise customer interaction by offering multi-

channel support. As a result contracts are

broadening in scope as well as size, and CMS is

expected to grow by 7% CAGR over the next four

years (see figure 16).

HR BPO is now seen as able to deliver reliable

savings as well as enhancing existing capabilities

to enable better talent management. For example,

technology innovation around workforce

management will continue to drive growth and

increase this sector’s attractiveness. As a result

this sector continues to mature and deal sizes are

increasing. Growth is expected to continue to

remain strong at CAGR 7% over the next four

years (see figure 16) and larger deals, such as the

$150m deal between Unicredit and HP last year

will become more common.

Procurement currently only accounts for a small

proportion of support services outsourcing spend.

However, it grew rapidly at a CAGR of 13%

between 2009-2012 (see figure 16). This is a new

area of focus in the post-crisis era, as

Procurement Service Providers (PSPs) have

matured and overcome some of the early issues

seen in the area. Additionally, large financial

services clients are looking to procurement

outsourcers to provide increased visibility of

spending, improved and standardised compliance

and reporting standards. For example, in 2013

Zurich signed a contract with Procurian, worth an

estimated $150m, to help the insurance group

manage and optimise its global procurement. This

demonstrates the trend of outsourcing decisions

being driven by the expertise and value provided

by a bespoke provider, rather than the search for

absolute cost savings from an offshore, low-cost

provider.

24 | Page



BPO contract 2012 snapshot

Industry specific

61%

Multitower global 36%

Regional / other 3%

Who is selling? BPO vendor snapshot 2012: Top vendors by deal value*

Rank Buyer Vendor Value Duration (years) Description

1 Citigroup HCL

Technologies $220m

5 years

(new contract)

Back office processing,

customer service management

2 UniCredit HP $150m 15 years

(new contract)

Payroll, application hosting and

management, systems

integration

3 Bank of

America T-Systems $120m

6 years

(new contract) Payment processing

4 Bank of

Queensland HP $108m

2 years

(extension)

Fulfilment, customer

management, front-office BPO

5 SunTrust First Data $90m 3 years

(renewal) Merchant processing

Rank Buyer Vendor Value Duration (years) Description

1 Friends Life Diligenta $2.2bn 15 years

(new contract) Life policy services

2 ING Cognizant $330m 7 years

(renewal) Insurance BPO

3 Aegon Serco $263m 10 years

(new contract)

Life policy services, customer

relationship management

4

Large UK

Insurance

Intermediary

Quindell $190m 3 years

(new contract)

Property and casualty (P&C),

claims processing

5 Lincoln

Financial Group Capita $168m

15 years

(extension) Life policy services

Who is buying? BPO major deals snapshot 2012

Top 5 Banking deals

Top 5 Insurance deals


*Note: Publicly available contracts

12%

10%

10%

10%

8% 7%

7%

6%

30%

Cognizant

Serco

Citibank

TSYS

BNY Mellon

Quindell

State Street Corporation

HP

Others



76 79 83 87

54 57

60 64

20 22

23 25

69 68 70 73

45 47 49

51

16 17 18

19

0

20

40

60

80

100

120

140

160

180

200

2009 2010 2011 2012 2013 2014 2015 2016

To

tal M

ark

et

Va

lue

($

bn

)

Asia Pacific

EMEA

Americas

Figure 17. Financial services BPO market size 2009-2012, forecast 2013-2016, by region

6% / 7%

CAGR

2009-12 / 2012-16

5% / 6%

2% / 4%

26 | Page

Figure 18. Financial services BPO average contract value and number of deals signed 2009-2012, by region

35

74

43

21

-

10

20

30

40

50

60

-

20

40

60

80

100

120

2009 2010 2011 2012

i. Americas

Ave

rag

e c

on

tra

ct

va

lue

($

m)

Nu

mb

er o

f de

als

sig

ne

d

88

46

79 97

-

10

20

30

40

50

60

-

20

40

60

80

100

120

2009 2010 2011 2012

ii. EMEA

Ave

rag

e c

on

tra

ct

va

lue

($

m)

Nu

mb

er o

f de

als

sig

ne

d

13 32

21 20

0

10

20

30

40

50

60

-

20

40

60

80

100

120

2009 2010 2011 2012

iii. Asia Pacific

Ave

rag

e c

on

tra

ct

va

lue

($

m)

Nu

mb

er o

f de

als

sig

ne

d

Number

of deals

signed

Number

of deals

signed

Number

of deals

signed



Global BPO Contract Activity

The total market continued to grow, with the Americas the source of more than 50% of global BPO

revenues and EMEA contributing 33% of the market. Asia Pacific BPO was the smallest region at 10%, but

continues to see strongest growth of 6% over the last four years. EMEA had the largest average deal

value, at around $97m per deal in 2012. While Asia Pacific deals have remained consistently relatively

small (average contract value $20m in 2012), we have seen a marked decline in contract value in the

Americas – from highs of $74m average in 2010 to $21m in 2012. The overall trend indicates a move

towards smaller, more flexible arrangements as part of diverse outsourcing portfolios. All data is potentially

affected by extremely large, long-term deals that can skew the average value in any one year.

BPO performance in financial services Regional analysis

27 | Page

The market for BPO in the

Americas showed growth of 6%

in 2012. The market shows

continued growth, with the

forecast showing relatively

strong growth of 7% CAGR

between 2012-2016.

The Americas saw a large leap

in the number of deals signed in

2012, but average contract

values continued to fall,

indicating that a preference for

smaller deals is driving growth

(see figure 18i).

The market returned to good

growth last year (7%), an

indication that banks are finally

recovering from the financial

crisis.

In contrast to other geographies

EMEA average contract values

were at a four-year high in 2012,

but the number of deals signed

continued to fall from a high in

2010 (see figure 18ii). Many of

the largest insurance an appetite

from the insurance sector to

extend the reach of outsourced

operating models in their

organisations. See our special

feature for more in depth

analysis.

Despite being impacted by the

global recession the BPO market

in Asia Pacific has outperformed

other geographies, with 6%

growth (CAGR) over the last four

years.

The number of new deals being

signed is recovering following a

four year low in 2011. Average

contract values have remained

stable between 2011 and 2012.

There were several large deals

signed in Australia in 2012. For

example, EDS has won a two-

year contract extension by Bank

of Queensland to provide

fulfilment for both consumer and

business banking.

Americas BPO Activity

EMEA BPO Activity Asia Pacific BPO Activity

Average

contract

size

Market

size $19.2bn $51.1bn $72.9bn

$20m $97m $21m


CAGR

2009-2012 6% 5% 2%

Elix-IRR Trends in Outsourcing in the Financial Services Industry 2013 28 | Page Elix-IRR Trends in Outsourcing in the Financial Services Industry 2013



Intr

oduction

Mark

et C

onte

xt

BP

O T

rends

ITO

Tre

nds

ITO Trends Analysis

Featu

res

Conclu

sio

n



Figure 20. Financial services ITO average contract value and number of deals signed 2009-2012


Figure 19. Global financial services ITO market size 2009-2012, forecast 2013-2016, by domain

32.3 32.8 33.4 34.1

7.2 7.2 7.4 7.6

31.6 31.3 31.6 32.0

7.9 7.6 7.5 7.3

0

5

10

15

20

25

30

35

40

45

50

2009 2010 2011 2012 2013 2014 2015 2016

Ma

rke

t S

ize

($

bn

)

Applicationmanagement

Infrastructureoutsourcing

30 | Page

94 110

147

99

0

10

20

30

40

50

60

70

80

90

100

0

20

40

60

80

100

120

140

160

2009 2010 2011 2012

Ave

rag

e c

on

tra

ct

va

lue

($

m)

Nu

mb

er o

f de

als

sig

ne

d

Number

of deals

signed



31 | Page

Source: Gartner, “Forecast Overview: Public Cloud Services, Worldwide, 2001-2016, 4Q12 Update”

The ITO market: an increasingly blurred

definition

The ITO market has been in decline in real terms

across all domains, with 1% growth on 2011 total

ITO performance and a four year CAGR of -0.2%

(see figure 19). In part this is due to a move

towards integrated BPO and ITO deals, together

with a fast growing cloud services sector, which is

blurring traditional definitions of ITO.

The traditional ITO market appears increasingly

mature, with most potential cost savings realised

and prices extremely competitive. The majority of

the major financial services institutions have

largely outsourced core IT infrastructure, so future

business will take the form of renewals and re-

tenders rather than net market growth.

The future for ITO “mega-deals” is uncertain, with

many companies unsatisfied with the level of

service they receive. As with BPO, many

businesses are increasingly opting to use smaller,

more agile providers to meet their strategic needs.

This is starting to be evidenced in retail banking,

where institutions are leveraging small, focused

providers to deliver online services which are

becoming the main channel of customer

interaction. As Barclays’ partnership with Tech

Hub in Manchester shows, banks are starting to

turn to start-ups, rather than their traditional

providers, to help them solve their strategic

challenges.

Cloud services are blurring the definitions of

traditional ITO

Cloud computing is allowing providers to offer

cutting edge platforms (both software and

hardware) without the large upfront capital cost,

but in a scalable and usage based form. Gartner

has estimated the public cloud services market is

worth $131bn in 2013, up 18.5% from last year.

Amazon Web Services (AWS) alone, according to

Macquarie Capital, earned $3.8bn in 2012.

Many of these cloud deals are not captured as

traditional ITO and this is lowering the apparent

size and number of contracts signed. MetroBank

set a precedent in 2010 when it outsourced its

entire IT to NIU Solutions on a “pay as you grow”

model, highlighting the value of software as a

service which does not require large capital

investment to access state of the art technology.

Traditional ITO vendors are now investing in cloud

computing to try and capture some of this growing

market. This is exemplified by IBM acquiring

SoftLayer; a cloud computing firm for $2bn.

Whether these established ITO players can

successfully transition their existing customers to

a cloud solution, or if they will look for a solution

elsewhere, is yet to be seen.

Pure ITO will continue to be side-lined by

broader outsourcing propositions

A key factor contributing to the apparent absence

of growth in the market is the shift towards vertical

integration of numerous types of ITO services

under a BPO wrapper. As companies look for new

ways to drive additional value from outsourcing,

they are turning away from pure ITO and entering

into innovative solutions, or strategic partnerships

that integrate technology with BPO to provide

joined-up solutions that span the value chain.

By outsourcing the technology as well as the

process, the entire processing cost base can be

rationalised. This can also enable companies to

avoid large investments in systems development

which is important in the current capital-

constrained financial services environment where

operations and IT have to compete for capital

funding with the rest of the business.

Therefore, core enabling services that typically fell

into the remit of ITO are increasingly being offered

as part of a cohesive end-to-end solution, but

under the BPO banner. For example, in 2012

TSYS was awarded a $120m credit card

processing contract by Bank of America.

Processing was previously carried out in-house on

a proprietary system, now however a TSYS

platform (TS2) will be used.

We expect to see more BPO contracts that have

embedded IT elements over the coming years,

with technical elements enabling and automating

the business processes.

ITO performance in financial services Market trends


$32bn 81%

$7bn 19%

Infrastructureoutsourcing

Applicationmanagement

0

5

10

15

20

25

30

35

40

2009 2010 2011 2012 2013 2014 2015 2016

Ma

rke

t S

ize

($

bn

)

Figure 21. Financial services ITO market 2009-2012, forecast 2013-2016

32 | Page

Total: $39bn

Figure 22. Financial services ITO average contract value and number of deals signed by domain 2009-2012

129

208

366

101

-

10

20

30

40

50

60

-

50

100

150

200

250

300

350

400

2009 2010 2011 2012

i. Infrastructure

outsourcing

Ave

rag

e c

on

tra

ct

va

lue

($

m)

Nu

mb

er o

f de

als

sig

ne

d

20 22 22

52

-

5

10

15

20

25

30

35

40

-

10

20

30

40

50

60

2009 2010 2011 2012

ii. Application

management

Ave

rag

e c

on

tra

ct

va

lue

($

m)

Nu

mb

er o

f de

als

sig

ne

d


Number

of deals

signed

Number

of deals

signed



Infrastructure outsourcing

Infrastructure outsourcing continues to dominate

the ITO market in financial services, making up

81% of total spend in 2012 (see figure 21). Growth

has remained low over the four previous years at

0.3% CAGR, but is forecast to pick up slightly

from 2013, to CAGR 1.6% 2012-2016 (see figure

21), however this still remains below the projected

inflation rate.

The average value of infrastructure outsourcing

deals fell sharply in 2012 (see figure 22i), as a

result of fewer “mega-deals” being signed in the

market place, although the total number of deals

recovered slightly from previous years. However,

on average, infrastructure outsourcing deals had

larger average contract values than application

management outsourcing, and six out of the top

ten deals in both banking and insurance this year

were for infrastructure outsourcing services (see

ITO contract 2012 snapshot for further details).

The long-term nature of most infrastructure

outsourcing arrangements has contributed to the

relatively flat performance of the domain.

Additionally, institutions appear to be

consolidating infrastructure (reducing overall

spend) and are increasingly wary of large, long-

term investments.

In contrast to the relatively flat performance of

traditional ITO infrastructure deals, we are seeing

an increase in cloud solutions being employed in

this space. Gartner forecasts that the

‘Infrastructure as a Service’ (IaaS) market showed

growth of 42.4% in 2012. The laaS ‘pay as you go’

model can help institutions manage variable

usage; particularly at peak demand, however

migration costs can be high. The value of ‘big

data’ and the insights it can provide for marketing,

risk assessment and sales could also prove to be

a driving force for IaaS. The popularity of this

reflects financial services institutions’ desire to cut

their fixed costs in a strategic manner.

Application management and development

Market performance was poor with a 2% decrease

from last year, continuing a year-on-year decline

in application management outsourcing spend

(see figure 21). The number of contracts signed

last year also fell, albeit slightly and in line with the

broadly static trend of previous years (see figure

22ii). Average contract value rose, as a result of

several large contracts in 2012, such as the

$350m application management deal CGI signed

with National Bank of Canada (see ITO contract

2012 snapshot for further details).

The rise of cloud computing and the importance of

developing agile digital strategies is reducing the

relevance of traditional application development

solutions. For example, ‘Platform as a Service’

(PaaS) is forecasted by Gartner to grow to $1.5bn

worldwide in 2013. PaaS could enable financial

services firms to increase the speed of application

development, enabling them to react more quickly

to opportunities at a lower cost.

Despite this trend, service providers will continue

to generate revenues in this area due to the

importance of quality maintenance for current

systems. This was brought into sharp focus after

the well-publicised issues with front line systems

at RBS in the summer of 2012, which left

customers unable to withdraw cash from ATMs or

process transactions, and were ultimately blamed

on outsourcing application development and

management.

Application development is not effectively

captured as part of the market analysis as it is

often purchased as part of wider project services

or spend is with software houses rather than

traditional outsourcers. However, the use of third

party vendors for application development

continues to be a key element of sourcing strategy

for financial services firms.

ITO performance in financial services By domain

33 | Page

Sources: Gartner, “Forecast Overview: Public Cloud Services, Worldwide, 2001-2016, 4Q12 Update”

Everest Group, “Everest Cloud Connect Enterprise Cloud Adoption Survey 2012-2016”


-0.5%

CAGR

2009-12 / 2012-16

-1%

1%


Figure 23 . Global financial services ITO market size 2009-2012, by region

34 | Page

16 16 16 16

14 13 13 13

10 10 9 10

0

5

10

15

20

25

30

35

40

45

2009 2010 2011 2012

To

tal M

ark

et

Va

lue

($

bn

)

Asia Pacific

EMEA

Americas

Figure 24. Financial services ITO average contract value and number of deals signed by region 2009-2012

52 38

69

158

0

10

20

30

40

50

60

0

20

40

60

80

100

120

140

160

180

200

2009 2010 2011 2012

i. Americas

Ave

rag

e c

on

tra

ct

va

lue

($

m)

Nu

mb

er o

f de

als

sig

ne

d

150 149

194

67

0

5

10

15

20

25

30

35

40

45

0

20

40

60

80

100

120

140

160

180

200

2009 2010 2011 2012

ii. EMEA

Ave

rag

e c

on

tra

ct

va

lue

($

m)

Nu

mb

er o

f de

als

sig

ne

d

41

145 168

95

0

10

20

30

40

50

60

0

20

40

60

80

100

120

140

160

180

200

2009 2010 2011 2012

iii. Asia Pacific

Ave

rag

e c

on

tra

ct

va

lue

($

m)

Nu

mb

er o

f de

als

sig

ne

d

Number

of deals

signed

Number

of deals

signed

Number

of deals

signed



Global ITO Contract Activity

The number of new deals signed in 2012 continues to show signs of decline from the 2009 level (see

figure 24). Average contract values have returned to 2009-2010 levels after a noticeable rise in 2011,

driven by a number of large transformational deals in EMEA.

ITO performance in financial services Regional analysis

35 | Page

The Americas followed the

global trend of falling ITO deal

numbers, with less deals signed

in 2012 than previous years.

However, the average contract

value rose again this year,

boosted by several very large

insurance deals signed.

The largest ITO deal in 2012

was in Latin America, with Caixa

bank signing a 10-year contract

with CPM Braxis Capgemini in

Brazil. Capgemini will become

Caixa's strategic IT services

provider helping them to

modernise current IT systems

(see Appendix for further

details.)

The absence of any sizeable

deals has severely impacted

average contract values in 2012.

This is in stark contrast with a

four year-high in 2011.

Furthermore, the number of

contracts signed in 2012

continues the downwards trend.

Many European financial service

providers are recovering slowly,

with many banks supported

solely by state bail-outs, and are

unwilling to embark on

expensive infrastructure projects.

The Asia Pacific ITO market

remains mainly limited to

Australia. Other countries in the

region do not have sufficiently

mature banking sectors, and

would struggle to gain favourable

labour arbitrage due to the low

cost locations they already

operate in. Newerbanks in

emerging markets do not have

the same legacy IT system

problems as EMEA and the

Americas, nor the same cost

pressures that are driving

outsourcing elsewhere.

The volume of Asia Pacific deals

remains small in comparison but

has not declined further from

2011, however, average contract

value fell by nearly half,

reflecting the reduction in the

number of large deals signed.

Americas ITO Activity

EMEA ITO Activity Asia Pacific ITO Activity

Market

size $10bn $13bn $16bn

Average

contract

size $95m $67m $158m

CAGR

2009-2012 -0.5% -1% 1%


ITO contract 2012 snapshot

Multitower Global 89%

Regional / Other 9%

Industry Specific

2%

Who is selling? ITO vendor snapshot 2012: Top vendors by deal value*

Who is buying? ITO major deals snapshot 2012

Rank Buyer Vendor Value Duration Description

1 Caixa CPM Braxis

Capgemini $1.3bn

10 years

(new contract) Multi-scope IT outsourcing

2 Large German

Bank Atos $450m

5 years

(renewal)

Multi-scope infrastructure

management

3 National Bank

of Canada CGI $350m

5 years

(renewal)

Application outsourcing &

management

4 Postbank Atos $260m 7 years

(new contract)


management

5 UBS HCL

Technologies $250m

5 years

(new contract) Application outsourcing

Rank Buyer Vendor Value Duration Description

1 Allianz HP $490m 5 years

(new contract) Infrastructure management

2 Old Mutual T-Systems $350m 7 years

(extension) Multi-scope IT outsourcing

3

Blue Cross

Blue Shield of

North Carolina

Fujitsu $250m 5 years

(new contract)


management

4 Blue Shield of

California HP $220m

5 years

(renewal) Multi-scope IT outsourcing

5 John Hancock CGI $142m 7 years

(renewal) Infrastructure outsourcing

Top 5 Banking deals

Top 5 Insurance deals


*Note: Publicly available contracts

23%

21%

14%

10%

6%

5%

4%

4%

3%

3%

7%

Capgemini

CSC

Atos

CGI

T-Systems

IBM

HCL Technologies

HP

EVRY

Steria

The restOthers



37 | Page


38 | Page 38 | Page Elix-IRR Trends in Outsourcing in the Financial Services Industry 2013



39 | Page

Intr

oduction

Mark

et C

onte

xt

BP

O T

rends

ITO

Tre

nds

Featu

res

Features Review

Conclu

sio

n



The features in this year’s report focus on

analysing the impact of external trends in financial

services and understanding the knock-on impact

these will have in financial services outsourcing.

As with previous years, regulation continues to be

a key change driver across the financial services

industry, both in terms of the operational

limitations it imposes and the cost of compliance.

This year we also explore in part the impact

increasing customer demands are having on

the industry.

40 | Page

1. Regulation

Our first feature examines the structural impact of forthcoming

regulation on outsourced support arrangements

2. Outsourcing in the future retail bank

Our second feature looks at how digital disruption in retail banking

is changing the way banks think about sourcing and support

models

3. Moving up the Value Chain

Our third feature examines how transaction banks are well placed

to meet the demands of investment banks for more holistic and

transformative solutions

4. Challenging times for the Life and Pensions industry

Our fourth feature focuses on how margin pressures in the

insurance industry driven by aging infrastructure and regulatory

capital demands are behind a new wave of outsourcing

5. New destinations for outsourcing

Our final feature explores offshore destinations that could deliver

furthercost savings, focusing on Sri Lanka and Colombia as

possible alternatives to traditional outsourcing destinations such as

India and Brazil



1. Regulation

Intr

oduction

Mark

et C

onte

xt

BP

O T

rends

ITO

Tre

nds

Featu

res

Features Review

Conclu

sio

n


Increasing pressure from politicians

The various components of an outsourcing

regulatory framework make it clear that the

ultimate accountability for the business process

lies with the client organisation rather than the

service provider. As accountability cannot be

abdicated to a third party, putting in place

appropriate governance procedures is key in order

to retain control over outsourced functions.

Whilst the spectre of individual criminal liability is

looming over financial services, it is a well

established principle in outsourced services

across other industries. Whilst BP is inextricably

linked with the Deepwater Horizon incident, they

did not own or operate the rig. Despite this, their

lack of control over the two outsourced service

providers ensured their fines were roughly double

those of the organisations that actually operated

the rig. Litigation is likely to persist over the next

twenty years and damages may reach $20bn; this

exacerbates the exceptional reputational damage

that has already been done to BP.

New referee – new rules

The financial services industry in the United

Kingdom is dual-regulated by the Financial

Conduct Authority (FCA) and the Prudential

Regulation Authority (PRA) after the dissolution of

the FSA in April 2013. Importantly, this system of

dual regulation extends to outsourcing

arrangements.

Specific FCA and PRA rules on outsourcing are

found in the Senior Management Arrangements,

Systems and Controls (SYSC) handbook. There

are specific requirements in relation to the

outsourcing of critical or important functions; a

function is deemed to be critical or important if a

failure in this area would affect the firm’s financial

performance and ability to comply with regulatory

obligations.

SYSC rules impose requirements on, amongst

other things:

• The due diligence to be undertaken in relation

to a proposed supplier

• The outsourcing contractual terms

• The basis on which the regulated firm should

supervise the outsourced functions and

manage the risk of the outsourcing

Whilst there have been regulatory requirements

for outsourcing for the past six years, it is

particularly relevant in light of recent political

developments. The publication of “Changing

Banking for Good”, the Final Report released by

the Parliamentary Committee on Banking

Standards and the FCA Risk Outlook for 2013,

have brought the issue of individual and criminal

liability into sharp focus.

The importance of control

Regulators continue to challenge institutions to

drive ever-greater levels of compliance, whilst

institutions strive to return to levels of commercial

performance that existed pre-financial crisis.

HSBC’s $1.9bn fines for Anti-Money Laundering

weaknesses in Mexico at the end of 2012 also

highlight the severe potential consequences of

weak or ineffective control over local entities.

The current regulatory environment continues to

evolve. The imminent implementation of AIFMD is

concerning the buy-side; MiFID II is occupying

sell-side participants; Solvency II, despite

continued delays in its implementation, is still

affecting the insurance industry. Substantially

increased capital requirements are also enduring.

As new regulations are introduced, the increased

costs borne by the financial services industry,

together with persistently difficult market

conditions, make outsourcing of non-critical

functions an attractive proposition.

However, this regulatory process, together with

the drive towards criminal sanctions against

organisations or individuals that breach

regulations, highlights the need for financial

services institutions to professionalise and

standardise control frameworks around third-party

arrangements, in the same way as it has been

done with their own operations.

The changing face of regulation Oversight of outsourced services is increasing

42 | Page

“Recent banking failures and the introduction of more stringent regulation have emphasised the importance of clear oversight and control over outsourced processes”



Because of the global reach of regulation, it is more helpful to look at key themes and their impacts on

outsourcing or support services arrangements, rather than scrutinising individual regulations on a case-by-

case basis.

Regulatory impact on support models

43 | Page

Theme Detail

Implication for outsourcing and

support models

Global

regulation

provides

leading

players with a

singular focus

• Although any given regulatory compliance is

still rooted in the local jurisdiction of the

principal booking entity, some of the largest

banks are responding to complex global entity

structures by raising internal compliance

targets to the highest standard, in many cases

above the level of stringency of local

requirements, in order to avoid any

unintended consequences of executing

business plans

• New deals, renewals and

extensions to existing outsourcing

deals will come under a greater

level of scrutiny for alignment with

internal policies and procedures as

institutions survey their global

supplier landscape

Strengthening

client

validation

measures

• When the key priorities of institutions are

assessed, regulations which mandate the

need for an enhanced understanding of their

customers are amongst the most important

• Key measures include: know your customer,

anti-money laundering, anti-bribery &

corruption

• All of these measures share the same feature,

which is a significant increase in operational

overhead and reporting requirements in the

interests of understanding institutions’

customers fully and sustainably to prevent

against criminal and terrorist financial activity

• Transactional legal services

providers are well placed to be able

to offer a differentiated proposition

in this area

• Institutions could possibly pool

resources to create industry utilities,

retaining cost and expertise within

the financial services industry

Capital

adequacy and

liquidity

• RoE continues to rebound, albeit slowly

• Some commentators have predicted that the

trilateral regulatory strengthening at global,

US and EU levels would eventually drive

fracturing and regionalisation

• JP Morgan and Oliver Wyman have taken the

stance that regulation is at its most

aggressive in the EU and as a result it is likely

that fragmentation will accelerate

• Institutions will be seen turning to

service providers to support

improved financial management of

their businesses. For example,

enhancing the effectiveness and

decreasing the cost of intra-day

liquidity management buffer

charges

Credit

mitigation

• Sell side institutions are required to maintain

enough liquid assets, net of any liabilities, to

ensure the settlement of all scheduled

liabilities in the event of their own failure and

liquidation

• Institutions will reflect on the

requirement to preserve core

business and release non-value

adding services which to date have

not been seen as candidates for

outsourcing e.g. derivatives post

trade processing

Clearly the greater regulatory burden on financial services institutions is driving firms to find innovative

ways of cutting costs whilst increasing or preserving service quality. While outsourcing is clearly continuing

to drive efficiencies for financial services institutions, the increasing scope and depth of regulation is also

compelling buyers to implement improved governance and control frameworks around outsourcing

arrangements.


44 | Page

2. Outsourcing in the future retail bank

Intr

oduction

Mark

et C

onte

xt

BP

O T

rends

ITO

Tre

nds

Featu

res

Features Review

Conclu

sio

n



Evolution: Commoditised back office

processing and support functions will remain

the mainstay of outsourcing in retail banking

Following the core messages of our report, it is

clear that outsourced service provision remains a

key part of banks’ sourcing models. Our outlook

for many elements of outsourcing in retail banking

are not expected to change in the immediate

future, in particular:

• Highly repeatable, commoditised back office

processes, for example core banking systems

and payment processing (making up the

largest group of retail banking BPO

outsourcing contracts signed this year, and

forecast to grow with 5% CAGR over the next

four years, see figure 14). This also includes

other discrete services, for example cash

handling, card production and cheque handling

amongst others.

• Non-core, and non-specific functions, such as

IT desktop support, printing, document

storage, and security, will remain potential

areas of outsourcing where there is a strong

cost saving potential. Higher value services

are seeing more pronounced growth as retail

banks seek greater value for money across the

business, for example procurement and HR

outsourced solutions (see figure 16).

Technological innovation, as well as increased

regulation and reduced margins, are putting

pressure on transactional services in banks. But

changes are likely to be gradual and evolutionary,

and will remain commoditised and cost driven.

Service is still likely to be provided by

outsourcing, through offshoring to a lower cost

location, or as part of a shared service

environment.

Some of the key sourcing changes we are seeing

include a growing market for innovative IT

outsourcing, including mobile and digital.

Providing the back office capabilities to process

these new forms of transactions and new products

will require some changes to current outsourcing

provision, and banks are looking at current ITO

deals and expecting greater flexibility to support

this going forward. In part the move towards

greater flexibility is being driven by greater

appetite in the industry around cloud solutions.

Revolution: Digital transformation is driving

key changes to the retail banking customer

engagement model

The retail banking industry is undergoing rapid

change, with customer interaction shifting from

physical channels to digital channels, and

alternative payment methods (online, mobile and

contactless) changing the way that customers

transact. The core customer facing elements of

the business are required to evolve rapidly to fill a

widening gap between customer expectations and

the service they are able to provide. Furthermore

some elements of the bank are increasing in

importance as customer preferences evolve (such

as online or contact centre), while other areas are

seeing reduced usage (branch network). As such

banks are rethinking their support model to ensure

that the best service is being delivered to their

customers through new multichannel environment.

Services such as IT and digital technology may be

retained in house due to their new importance but,

equally, strategic use of third parties can provide

equal or better service and expertise. Some banks

are rethinking their support model entirely to

enable them to focus on core differentiators and

customer service elements only, and allowing far

more transactional elements to be handled by

other providers.

Over the following pages we will explore how

digital innovation is changing how customers

engage with their banks, and the impact on

sourcing and outsourcing models.

Outsourcing in retail banking Evolution and revolution


Other industries have already experienced the

drive towards digital and this has led to

increased retail banking customer expectation

Over the last decade, industries such as retail,

media, advertising and travel, along with many

others, have felt the impact of digitalisation.

Customer expectations in retail banking are being

set by the increasingly positive experiences with in

these industries.

Retail banking is rapidly changing, driven by

digital transformation and customer demand

We see three fundamental shifts taking place in

the retail banking sector, driven by customer

demand and digital challenger brands:

• The way in which customers interact with

their banks is shifting from physical

channels to digital channels: In the not-too-

distant future, one can envisage that the

majority of bank customers in developed

economies will carry out their banking needs

almost exclusively via their mobile phones, or

other personal device. Gartner concur with this

observation and predict that 50% of all bank

customers will use mobile banking as their

primary channel by 2016. Juniper Research

similarly forecast that over 1 billion mobile

phone users will use mobile banking by 2017,

compared to just over 590 million users in

2013. Banks need to develop coherent

banking applications and services across all

their channels, while at the same time

optimising the existing branch network to

reduce the number of under-utilised branches.

• Better service is being demanded across all

channels: Typically retail customers are not

looking for complex banking products – they

are looking for simple solutions that support

their desired banking objectives. This offers an

opportunity for disruptive organisations, who

are able to provide more focused solutions to

customer needs (for example PayPal, Square,

Google Wallet and m-pesa in Africa). The onus

is now on banks to simplify their portfolio of

products and services, not only to ensure they

are understandable, but also to ensure that

they meet customers’ specific needs. Banks

need to integrate their services to support

improved, “multi-channel” customer

experiences, across all channels including

branches, contact centres, online, mobile and

ATMs. Additionally, it is also clear that in the

future multi-channel in itself is only a stepping

stone towards “omni-channel”, where customer

interactions are truly integrated across

channels and an interaction started on an

application has the potential to be completed

online or on through a contact centre

• Better analytics and use of big data to drive

more customer-centric service: Customer

analytics functions are being established to

seek actionable insights from big data. In the

future real-time analytics will be used to

understand and respond to specific customer

objectives, allowing banks to innovate around

lifestyle events, such as shopping, travel and

entertainment, as well as customer lifetime

events, such as university enrolment, new

employment, buying a house and retirement. It

is through these experiences that customers

can truly derive value from their banking

provider, and this advice should be offered via

any and all available channels – including

contact centres, mobile, ATMs, social media

and potentially branches. In fact, within the

next decade, banking advisory may be entirely

replaced by algorithms; a digital platform, with

access to customer data, market data and

financial algorithms, could be able to provide

financial advice to customers.

Emerging disruption in financial services

In recent years, the industry has seen the

emergence of disruptive business models at the

fringes of Financial Services. Companies such as

Wonga, who provide instant, short-term loans over

the internet, and Kickstarter, who provide a crowd-

funding platform, are redefining traditional

approaches to financial services.

Additionally, we have seen new entrants to the

banking industry such as Metro Bank, Britain’s

first new bank in over 100 years, who operate a

small number of branches but differentiate with

their internet and telephone banking services.

Metro makes heavy use of outsourcing providers

to allow them to focus on customer experience,

and not on supporting a core banking platform.

A new customer engagement model in retail banking

46 | Page



For many years, customer

expectations of channels

were largely met. The

branch network handled

many of the most important

customer engagement

points.

Customer channels were a

commodity that could be

provided through lowest

cost providers, including

outsourcers (e.g. contact

centres)

Past

The effect of digital

innovation has caused a

surge in customer

expectation in terms of the

level and type of services

they receive from their bank

Present

There is now a gap between

customer expectation and

bank performance. Banks

need to bridge the gap to

avoid losing customers.

Customer channels are a

source of differentiation so

banks need to use

providers that provide

value-add (and potentially

insource).

Future

Change in customer expectation

The digitalisation of retail banking has a profound

effect on customer management. For many years,

customer expectations of channels, particularly

the indirect banking channels, were largely met.

Due to customers’ experiences in other industries,

a step-change in expectations has placed banks

in a position whereby their quality of service

provision does not currently meet customer

expectations.

Customers demand more innovative and

convenient methods of banking, with expectations

being driven by other industries. Customers

expect to be able to access their bank anytime,

anywhere, through a multitude of channels, and

are moving away from some channels such as

branch.

This sector-wide gap between what customers

expect and what the sector can offer, is why there

is such a competitive focus on digital; closing this

gap, before competitors do so, is a strategic

imperative. The question is, what role does

outsourcing play?

Sourcing and business models

Increasingly, new channels are becoming more

strategically important, and with new channels,

different areas and services within the business

are moving into customer-facing roles. Some of

these areas of the bank would have previously

been considered part of the “back office”. So

whatever sourcing decision is taken, banks are

looking for best-in-class solutions, whether that

means outsourcing, specialist suppliers, or

retaining (or moving) in-house.

In all, we expect new, innovative banking business

and operating models to emerge over the next two

to five years. Progressive retail banks, as well as

disruptive entrants, will seek differentiation and

growth via digital means. As a consequence of

such competition, we are likely to witness

profound structural changes in the retail banking

sector.

This will mean radical change to banks’

operating models and sourcing strategies.

The changing face of customer interaction

47 | Page

Time

Customer

Expectation

Bank channel

service levels

Qualit

y of

Serv

ice

Expectation gap


Outsourcing services in the two sides of a bank,

customer-facing and transactional, are being

affected by the changes in the retail banking

landscape in very different ways. Throughout this

report we have laid out how traditional BPO and

ITO providers are moving into higher value service

provision in order to provide specific skills,

flexibility and expertise, while also continuing to

deliver reduced costs as banks feel the pressure

of reduced margins and increasing stringent

regulation. In retail banking we are seeing this

trend continue. The transactional segments of the

retail bank will continue to seek low cost solutions

to its back office processes. The customer facing

elements of retail banks are struggling to match

service expectations, so are experiencing some

unique sourcing challenges. We see several key

possible solutions and trends emerging:

1. Improve customer service through

regaining control of customer service

channels: In the short-term, with rising

customer expectations of direct channels,

banks are recognising the value of traditional

retail banking channel capabilities, such as

contact centre services. As such, the lowest

cost option (potentially outsourced or

offshore) may not be delivering acceptable

customer service. For example, Santander

moved its UK call centre back from India in

2011 in an attempt to boost customer service.

Across channels, including some previously

not regarded as customer facing, we will see

a trend towards insourcing of functions, or

use of strategic outsourcing to high-quality,

specialist firms who will likely shirk antiquated

metrics (such as average handing time in call

centres) in favour of superior customer

experience.

2. Outsource more, or the whole of, the

transactional elements of the bank to

focus on customer service: Being a

‘custodian of customers’ is critical for

competition, and hence should be the bank’s

core focus. Many banks are divesting control

of the operational elements of the bank in

order to focus on the customer facing

elements. Metro Bank in the UK has

outsourced the majority of its back office

activities/operations to a selected few

outsourcing providers.

3. Alternatively, if customer management is

not a core strength of a bank, use

outsourced providers to deliver

personalised customer service: In the

extreme, “outsourcing of customer

relationships” may appear like a radical

departure from banks’ historical strategies.

However, for many banks, burdened with

legacy technologies and constraining

organisational silos, retaining relevance in the

digital economy may require exactly such a

radical decision. Should a retail bank seek an

outsourcing partner for a customer facing

role, the nature of the outsourcing deal would

need to be heavily value-oriented and

focused on closing the customer experience

gap. We expect that there will be an increase

in such partnerships and outsourcing

arrangements in the future, and we have

already begun to see examples such as

simple.com, an American startup bank who

have formed an innovative partnership with

Bancorp. To Bancorp, the impact of this is to

remain a “custodian of transactions”, and

allow simple.com to focus on the customer

management, an area that plays more readily

to their strengths.

4. Use outsourcers to fast-track innovative

solutions and technologies that retail

banks may not have the capability or

resources to deliver: Some providers are

increasingly opting to use smaller, more agile

providers to meet their digital needs. This is

particularly the case in retail banking where

online services are becoming the main

channel of customer interactions. As

Barclays’ partnership with Tech Hub in

Manchester shows, banks are turning to start-

ups to help them solve strategic challenges.

However, careful management of suppliers is

required for banks seeking to achieve a

consistent “omni-channel” customer

experience, as using a larger number of small

suppliers can cause unwanted integration

requirements.

Changing retail banking outsourcing models

48 | Page



Retail banks moving forward

The digitisation of retail banking presents

profound opportunities, but also challenges, to

banks. A new set of technology tools and a

changed customer mindset are potential sources

of business inspiration. However, to monetise any

inspiration, banks need to:

• Define a common vision of how digital will

change the bank

• Innovate around customer objectives, not

banking products

• Transform the operating model to instil new

capabilities and customer objectives at the

heart of the organisation

• Focus on certain crucial capabilities and

initiatives – ‘Custodian of customers’?

‘Custodian of transactions’?

• Source appropriately to ensure that the best

suppliers are working with you. In particular

banks will need robust sourcing and vendor

management processes to ensure that they

can choose the best suppliers and get the

most value from their selection, given that

ranking suppliers by lowest cost will not

necessarily be the best approach to access the

new skills and capabilities required.

From vendor to partner

It is within this transformational context that future

outsourcing opportunities will be shaped. As

banks, and disruptive start-ups, form new

business models that deploy the power of digital

technology, they will look to outsourcing providers

and partner organisations to enable increased

focus. These dynamics will create a raft of new

opportunities, beyond the more traditional areas of

retail banking outsourcing. In turn, to keep step

with the digitalisation of retail banking, outsourcing

providers will also have to innovate within their

own capabilities and business models.

Future of outsourcing in retail banking

49 | Page


3. Moving Up the Value Chain

Intr

oduction

Mark

et C

onte

xt

BP

O T

rends

ITO

Tre

nds

Featu

res

Features Review

Conclu

sio

n



As with other areas of financial services,

outsourcing in corporate and investment banking

has historically focused on the “low hanging fruit”

of cost and headcount reduction. The industry is

now moving beyond labour arbitrage opportunities

to the creation and leveraging of utilities for

processes and technology. This is driven by the

changing appetite of investment banks who are

increasingly looking for holistic solutions to their

challenges from within the industry rather than

piecemeal product-based approaches to

remedying their cost issues. There is a substantial

need in the industry to variablise cost. Pressure

on margins is leading firms to reassess the need

for large fixed cost infrastructure, particularly in an

environment with the potential for highly volatile

volumes.

There are recent examples of investment banks

looking to outsource their entire operations

function, extending far beyond the third party

clearing and custody that many already outsource

to transaction banks. This presents a strategic

opportunity for transaction banks to broaden their

remit beyond the traditional custody and clearing

market, and to increase their client “stickiness”

and resultant wallet share.

The benefits of this are threefold:

1. Outsourcing revenue is less volatile than

traditional revenue streams. This is the

case particularly for new entrants in the

market who are more accustomed to making

money across capital markets. Analysts place

greater value on sustainable, repeatable

sources of long-term revenue, with the

associated positive impact on market value.

Assessment of forecasts of the growth in

securities processing (see figure 25), a

mainstay of ‘bank on bank’ outsourcing

underlines this position.

2. There is an increasing acknowledgement

that, with EMIR and AIFMD regulations

approaching, transaction banks’

traditional strengths in custody,

administration and processing creates

additional opportunities to service both

the buy-side and sell-side. The changing

market in derivatives, driven by increased

transparency and regulation, is pushing

market participants towards outsourcing their

emerging trade processing requirements.

Increased regulation on the buy-side is also

drawing new participants into the collateral

management process, creating a potential

market squeeze for eligible collateral.

Transaction banks with large amounts of

custody assets have an easily accessible

pool of high quality collateral, leaving them

well placed to benefit from the current

regulatory environment and the increased

pressure on high quality collateral that greater

central clearing is likely to cause.

3. Outsourcing is still an extremely profitable

enterprise. Whilst the classic BPO model can

provide profit margins of around 10%-20%,

the incremental clearing, custody and

settlement fees that transaction banks may

be willing to provide to anyone with the

wherewithal to package a single solution,

makes this even more lucrative.

Banks with the capability to provide outsourced

services to other banks – even their own

competitors, who may wish to focus on other core

areas of the trading and settlement value chain –

can profit from the trend toward transformational

solutions. However, if these banks do not

capitalise on this trend, organisations that have

not traditionally operated in this space may do.

Moving up the value chain The leveraging of transaction banks

51 | Page

Figure 25. Actual and forecast securities processing

outsourcing performance 2009-2016

“Providing outsourced services to other financial services

institutions can deliver further revenue streams to those who

capitalise on the trend”

46 44 47 49

51 53

56 59

0

10

20

30

40

50

60

2009 2010 2011 2012 2013 2014 2015 2016

Ma

rke

t s

ize

($

bn

)


Transaction banks are increasingly looking to

exploit their existing custody and clearing client

relationships when creating a holistic solution that

extends beyond these traditionally outsourced

processes. This is increasing competitive

pressures on the transaction banking community,

as those who are able to package a complete

processing solution are likely to pick up the

incremental clearing and custody business.

Exacerbating these pressures, several third party

service providers and technology solutions

organisations are looking into the opportunity of

providing these services and some have been

successful in completing large, potentially industry

changing deals. In response to the threat of

competitors capturing market share, transaction

banks need to determine which part of the

spectrum of outsourced services they want to

focus on.

Securities services outsourcing of post-trade

processes is a well established market with a

myriad of different service offerings from simple

settlement and custody solutions through to

traditional Model B clearing (see figure 27).

Securities Processing accounted for nearly half

(47%) of the Banking BPO market in 2012.

However, the market is being shaken up by non-

banks who, through technological innovation

partnerships, find themselves able to provide the

kind of services that the market is demanding.

In response to service providers like Accenture

and Broadridge moving into securities processing

(see figure 26), large transaction banks are also

developing their offerings. The dynamics of the

market for securities processing will shift with the

entry of these new competitors, and transaction

banks will be forced to act more like professional

services firms. As a result this will increasingly

lead to transaction banks focusing on efficiency,

standardisation and technology rather than their

historic emphasis on product-specific expertise

and relationships.

An interesting twist on some of the more standard

offerings in this space is demonstrated by the

development of account operating models by

various transaction banks in Asia. Here, a bank’s

clients remain direct members of the central

securities depository in their jurisdiction; however,

the bank operates on their behalf rather than

taking on the trade themselves.

The market for service providers is changing

52 | Page

Accenture and Broadridge have created Accenture

Post-Trade Processing, a Joint Venture exploiting

Accenture’s traditional strength in BPO and

Broadridge’s post-trade technology expertise.

They have signed up Societe Generale’s Corporate

and Investment Bank as their first client and will

insource their Back Office securities function,

covering 50 markets. The financial terms of the

agreement have not been disclosed.

Figure 26. Accenture post-trade processing deal



Whilst there is innovation on the securities side,

the increased financial and regulatory burden of

operating in the derivatives sector should push

more sell-side organisations into outsourcing post-

trade processes to third party service providers.

Indeed, the fundamental operating model of an

investment bank may well only encompass

execution and advisory in future, with their back

office functions outsourced to whomever

represents best value for money. For example,

two major Swiss banks have released Request for

Proposals (RFPs) for organisations to take on

their global securities processing architecture.

Despite the positive picture painted by the

development of new industry utilities and service

offerings, there are some questions. It remains to

be seen whether the sell-side is truly prepared to

give up such a substantial portion of control over

their back office processing, given the increased

accountability but diminished control created by

recent regulation over outsourced services.

Similarly, it is open to debate how ready

transaction banks are to actually service these

needs in the short to medium-term.

53 | Page

“The increasing industry appetite for back office outsourcing is leading to

a growing convergence of service providers with new service models”

Figure 27. Examples of securities services outsourcing models

Traditional

Settlement &

Custody

Self Clearing

BPO incl.

technology

BPO exc.

technology

BP2S 3rd party

Clearing (Asia)

IB / TB

Operations

consolidation

Model A/B

Clearing

Account Operator

Services

Securities Post-Trade

Outsourcing Spectrum

Fully

outsourced In-house


54 | Page

4. Challenging times for the Life and Pensions industry

Intr

oduction

Mark

et C

onte

xt

BP

O T

rends

ITO

Tre

nds

Featu

res

Features Review

Conclu

sio

n



A challenging environment

In an increasingly challenging market, we believe

that now is a critical time for life and pensions

firms. In order to protect and grow their bottom

line they need to innovate and meet both internal

and external forces head-on. Recent news of Old

Mutual-Skandia’s commitment to a new 20 year

(BPO) deal with IFDS (the State Street-DST

Systems joint venture) indicates substantial

confidence in the long-term ability of outsourced

solutions to support their business and drive

substantial cost efficiencies. On top of last year’s

$2.2bn mega-deal between FriendsLife and

Diligenta, this may be a sign that the life insurance

and pensions market is set to see increased

outsourcing activity.

Although many life and pensions firms were less

impacted by the 2008 recession than other

financial services companies, a number of internal

and external forces have resulted in a challenging

environment within which the industry needs to

operate (see figure 28).

External forces

1. Regulation

Pending regulation, such as Solvency II in the

UK, has forced insurance organisations to

invest heavily in new IT and operating

processes to provide the necessary controls

and transparency.

2. More demanding customers

As in other industries, the introduction of new

technologies, such as internet self-service,

price comparison and social networking has

raised demands of customer service.

Customers are empowered by the wealth of

information available, and are increasingly

using their knowledge of the market to drive

negotiations in the sales process.

Internal forces

1. Inappropriate operating models

Life and pensions firms are largely constrained

by inefficient operating models and legacy

systems, required to support their closed

books long into the future. These portfolios are

commonly outsourced to allow the firm to

focus on core business requirements.

2. Information breakthrough

High-quality data is being supplemented with

large quantities of unstructured profiling data

from sources such as social media. Insurers

will increasingly need to use advanced

analytics and IT systems to know their

customer, to better serve and to sell.

Decreasing margins

As the factors described combine, the industry as

a whole finds itself squeezed at both ends. With

capital requirements being further challenged by

regulators and an increasingly tough market, both

in terms of customer demands and industry

competition, large firms in the industry are

beginning to look again to outsourcing. A key

driver is the desire to remove the costly

administration burden of aging closed book

policies in addition to unlocking capital. On the

following page we begin to describe how these

factors manifest themselves in the context of

historical trends in the life and pensions BPO

industry.

Challenging times In the Life and Pensions industry

55 | Page

Inappropriate

operating models

Information

breakthrough

Internal

Decreasing margins

Tightening

regulation

More demanding

customers

External

Figure 28. Drivers for a new approach


Early BPO in Life and Pensions

During the early 2000s we saw the first phase of

early outsourcing deals in the life and pensions

sector focusing around the offloading and

aggregation of so called “zombie” funds to BPO

providers. It was in this arena that firms such as

Phoenix Life, Capita and Resolution found

success. Policies transferred to providers were

mature policies: premiums were being collected

and very little real client interaction was required.

Outsourcers, unencumbered by the large and

expensive “parachute” of processing and support

services, therefore had tremendous ability to strip

away administration costs and build strong

business cases for taking on these policies.

The new shape of deals

We believe that we are beginning to see a new

phase of outsourcing in the sector. In the wake of

the financial crisis, life and pensions firms are

regrouping and waking up to the complex and

costly burden of policy administration costs that

they carry, both for their legacy books as well as

their new business. In order to focus on

management of their assets, where the largest

potential for profit in the industry lies, firms like

BNP Paribas Cardif are leading the way to get

these functions off their hands. In parallel,

regulation in the industry is creating increasingly

large pressure on capital requirements, leading

firms to explore alternative ways to unlock capital

from their businesses.

Most interestingly; in continental Europe, where

regulators are more averse to outsourcing than in

the UK, we foresee increasing industry and

regulatory discussion around regulator reluctance

to outsourcing. As capital requirements tighten,

business’ desire to release capital and improve

their P&Ls through offloading costly administration

functions will only increase. Where the regulators

will strike the balance, and the subsequent

consequences on the outsourcing market, are yet

to be seen.

Examples of some large outsourcing deals in

the sector are described below:

A changing approach to outsourcing

56 | Page

Diligenta were last year awarded a contract with

FriendsLife to provide administration for 3.2m

policies. Policies include much of both the

closed book protection business and the

corporate benefits business.

$2.2bn 15 years New contract

Skandia and IFDS agreed a 20 year deal in Q3

2013 to outsource a number of its policy

administration functions, starting in 2016.

Undisclosed 20 years New contract



5. New destinations for outsourcing

Intr

oduction

Mark

et C

onte

xt

BP

O T

rends

ITO

Tre

nds

Featu

res

Features Review

Conclu

sio

n


In focus: Sri Lanka

India Sri Lanka

Ease of doing Business

(rank) 132 81

Construction Permits

(rank of ease) 182 112

Getting Electricity

(average time for connection) 105 days 103 days

Labour Tax

(%) 18.2% 16.9%

Enforcing contracts


Recovery rate after Insolvency (% returned) 44% 26%

Literacy 62.8% 91.2%

University Education

(people currently in tertiary education) 20,740,000 232,300

Junior BPO resource salary as % of US salary 10% 6.5 %

Source: Doing Business Rankings, UNESCO, CIA Factbook, SourcingLine Top Outsourcing Destinations




Sri Lanka is becoming a favoured outsourcing

location, rising up to rank 21st in the 2011 AT

Kearney Global Services Location Index. With

the ending of the civil war comes the

opportunity to become a leading destination.

Opportunities

Sri Lanka offers significant labour savings

compared to India and ranks well for ease of

doing business. The island also has strengths in a

number of more specialised services that

outsourcing providers are well placed to deliver.

For example, there is a wide finance and

accounting outsourcing capability due to a readily

available supply of chartered accountants trained

on the same accounting standards used in the

UK, in addition to strong analytics capabilities.

The government of Sri Lanka appears to have

recognised that they do not offer the scale

advantage of countries such as India and the

Philippines, and as such is targeting key areas for

growth in outsourcing, mainly centered around

capabilities in IT including software development,

training and IT enabled services. They also have a

young but emerging KPO industry, driven by firms

such as HSBC and WNS who have established a

local presence. The government is currently

offering significant tax and duty incentives,

including tax holidays of 4-12 years, which are

likely to contribute further to the growth of

outsourcing providers on the island.

Challenges

Infrastructure in Sri Lanka is often expensive and

of low quality. Although property prices can be

lower than in India, telephone charges are

significantly higher and electricity tariffs charged to

businesses are inflated to subsidise the general

population. High speed broadband internet access

also remains limited.

Additionally, the smaller population means large

companies will be unable to achieve savings from

scale. This is exacerbated by continued low rates

of tertiary education (~10%-12%) and the lack of

English speakers (~10%), particularly outside

Colombo.

Examples

Several multi-nationals already have centres in Sri

Lanka, including HSBC, who expanded their

network of group service centres into Colombo in

2004, and WNS who use Sri Lanka as a base

from which to deliver voice and multilingual voice

support. There are also several established local

providers such as BPO firm Hellocorp.

59 | Page



In focus: Colombia

Brazil Colombia

Ease of doing Business

(rank) 130 45

Construction Permits


Getting Electricity

(average time for connection) 165 days 57 days

Labour Tax

(%) 40.8% 18.2%

Enforcing contracts


Recovery rate after Insolvency (% returned) 16% 76%

Literacy % 90.4% 93.6%

University Education (currently in tertiary

education) 6,929,000 1,849,000


Source: Doing Business Rankings, UNESCO, CIA Factbook, SourcingLine Top Outsourcing Destinations



Colombia is beginning to follow more

established players such as Mexico and Chile

to become a rising star of the outsourcing

industry in South America. With North America

the largest buyer of outsourcing services the

Colombian government can see the potential

economic opportunity and are strongly

supporting the outsourcing and offshoring

industry with various government schemes.

Opportunities

Despite its reputation for drug-fuelled conflict,

Colombia has made significant steps to stability in

recent years. The capital Bogotá has reduced its

homicide rate by nearly 80% in the last ten years

to become one of the safest urban areas in Latin

America. Resuming in November 2012, peace

talks between FARC rebels and the government

promise to allow Colombia to fulfil its economic

potential. However, the government will have to

proactively challenge the world’s perception of

Colombia and further encourage foreign

investment.

The stabilisation of the political landscape is

improving business in Colombia, ranking 45th

worldwide in the World Bank’s ‘Doing Business’

rankings in 2013. Colombia has a well-enforced

regulatory environment, particularly in financial

services and also scored particularly highly for

‘protecting investors’, placing 1st in Latin America

and 6th worldwide. For example, legal stability

contracts are in place to protect investors. The

government also offers generous tax incentives to

encourage foreign investment, such as free trade

zones.

Colombia has secured loans from the Inter-

American Development Bank to develop their

outsourcing and offshoring sector. The

government has also set up free trade zones for

BPO facilities to further incentivise the industry.

Challenges

A challenge faced by Colombia in developing its

reputation in outsourcing is the low percentage of

English speakers. The government has

implemented initiatives aiming to address this,

such as the ‘National Programme for Bilingualism

2004-2019’, however the success of these

programmes has been questioned. Nonetheless,

there is a strong opportunity for Colombia to

provide contact centre services for Spanish

speakers from the US, Europe and the rest of

Latin America.

Compared to other South American markets

Colombia is less well developed, with fewer highly

skilled workers. The Colombian outsourcing and

offshoring market, as yet, has failed to attract the

same high value BPO or ITO activities that Brazil

or other South American countries provide, and

the majority of current operators are providing call

centre services.

Examples

There are a number of companies that operate in

Colombia, for example CitiGroup, Siemens, Tata,

Hewlett Packard (who run a BPO centre in

Medellin which handles group back office) and

Kimberly Clark (who operate their Global

Innovation Centre from the country).

Elix-IRR Trends in Outsourcing in the Financial Services Industry 2013 62 | Page 62 | Page Elix-IRR Trends in Outsourcing in the Financial Services Industry 2013



Intr

oduction

Mark

et C

onte

xt

BP

O T

rends

ITO

Tre

nds

Featu

res

Conclusion Conclu

sio

n


Elix-IRR Trends in Outsourcing Financial Services Industry 2013

Afterword

At the beginning of our report we asked ‘What

next for the financial services support model?’ The

answer is both complex and uncertain.

It is clear that service providers continue to drive

substantial cost efficiencies in both ITO and BPO

for the financial services industry, and as such we

can expect to see a continued stream of high-

value deals being agreed between the largest

financial services institutions and multi-tower

outsourcing firms. We believe that as the market

matures we will see a new wave of deals coming

through, as firms regroup following the financial

crisis and can focus on tackling the cost burden of

legacy systems and support processes. As a

result we expect to see outsourcing moving

deeper into core banking processes.

While the full impact of regulation is yet to be

articulated across the board, it is certain to

continue to place pressure on capital

requirements across the sector. This will

contribute further to the already existent pressure

on margins and drive firms to approach

outsourcing, both as a means to improve their

balance sheets and to release capital.

Finally, in the long-term it is clear that the financial

services sector is changing. Firms are increasingly

aware of the pressure that disruption places on

their business models, and are waking up to the

fact that the digital economy and a world of

connected consumers have been built around

them. Driven by what they are capable of doing

through self-service channels in other industries,

these consumers are demanding more of their

financial services providers, and firms will need to

innovate to catch up.

It is uncertain what shape outsourcing will take in

this context. As previously back-office functions

such as IT become core business competencies,

we may see businesses looking to take greater

control of the service and either bring it back

in-house, or outsource to truly specialist providers

who bring competitive advantage rather than

lowest cost commodity service. Conversely, those

processing activities once deemed core to

financial institutions are increasingly seen as

commodities.

In summary, ‘traditional’ definitions of outsourcing

(ITO, BPO etc.) are becoming outdated and miss

the diversification of offerings and providers,

making generic market trend analysis increasingly

difficult. What does seem certain is that as

financial services institutions work through the

long-term disruption to traditional business models

as a legacy of the financial crisis, outsourcing

services will continue to grow, evolve and play a

strategic role in supporting the industry

transformation.



Elix-IRR Trends in Outsourcing Financial Services Industry 2013

Elix-IRR


Contact Us

For further information regarding Elix-IRR and this

research report, please contact the following people:

Stephen Newton

Managing Partner

Email: [email protected]

Barry Lewis

Partner


Graham Busby

Partner


Anthony Potter

Partner


Elix-IRR is a strategic advisory firm specialising in

all forms of strategy, transformation, change, and

execution. We have grown to become a multi

award-winning company, working with

multinational clients around the world to help them

to successfully achieve their business plans and

deliver upon their market commitments. The mix

of experience, people and skills we offer is truly

unrivalled.

We have been internationally recognised in the

outsourcing and financial services domains, and

are proud to be ranked 5th in the IAOP World’s

Best Outsourcing Advisors list. We have also won

awards from both the Management Consultancy

Association and National Outsourcing Association,

amongst others, recognising our capability to

consistently provide Inspiring, Relevant and Real

advice to our clients.


66 | Page



67 | Page

Intr

oduction

Mark

et C

onte

xt

BP

O T

rends

ITO

Tre

nds

Featu

res

Conclu

sio

n

Appendix


Top ten banking BPO deals 2012

68 | Page

• HCL will provide back-end processes for loans,

financial products and customer service for Citi

• HCL will employ approximately 800 personnel

for the contract

1

The banking BPO market continues to be dominated by a small number of very

large deals

• TSYS has been awarded a credit card

processing contract by Bank of America

• The retail portfolio will now be processed on

TSYS' platform, TS2 • Processing was previously in-house on Bank of

America's proprietary system

• TSYS also processes the commercial credit card

portfolio

3

• EDS has been awarded a 2-year contract

extension by Bank of Queensland

• They will provide fulfilment for both consumer

and business banking

• IT infrastructure management and application

management services will also be provided

4

• The contract is operated under a joint venture

between the two entities

• The contract services 67,000 merchant locations

and processes $29bn in card volume each year

• Services to be provided by First Data include

payment processing, risk management and

merchant sales activities

5

• HP has been awarded a 15-year payroll and IT

outsourcing contract by UniCredit

• Services provided include payroll services and

application transformation to support migration

to SAP

• The contract will delivered via a jointly owned

company called ES Shared Service Center SpA

2 $220m 5 years

New

contract

Back office processing,

customer service

management

$150m 15 years New

contract

Payroll, application

hosting and mgmt,

systems integration

$120m 6 years New

contract Payment processing

$108m 2 years Extension

Fulfilment, customer

management services,

front-office BPO

$90m 3 years Renewal Merchant processing

UniCredit Business

Integrated Solutions SCpA



69 | Page

The business case for outsourcing back office

processing remains strong, particularly in payments and

securities processing

• The contract covers RBS' UK, Irish and US

consumer credit and commercial card

businesses

• Services provided include: statement

processing, card embossing, accounting and

settlement, fraud prevention, member service,

collection operating systems, correspondence

and risk mitigation

6

• BNY Mellon has been awarded a 10-year fund

accounting contract by Thomas Miller

Investment, an investment manager with $4bn

in assets under management

• Services to be provided include: custody, fund

accounting, fund administration and transfer

agency

8

• Degussa will migrate to TSYS' TS2 processing

platform in early 2012

• Services to be provided include: credit & debit

card processing, platform implementation,

payment processing, statement processing,

accounting and settlement, fraud prevention,

collection operating systems and risk mitigation

9

• Services provided include: payroll, workforce

administration, recruitment services and

compensation administration

10

• State Street has been awarded a custody

contract by QSuper, a retirement fund in

Australia with $32bn in assets

• Services provided include: custody, unit pricing,

compliance monitoring, alternative asset

reporting, tax and accounting services

7 $75m 5 years Renewal Payments processing $60m 3 years Renewal Securities processing

$50m 10 years New

contract Securities processing

$50m 5 years New

contract Payments processing $40m 8 years

Renewal

& Expansion

Multi-process HR

outsourcing


Top ten insurance BPO deals 2012

70 | Page

• Diligenta has been awarded a contract with

Friends Life to provide administration for 3.2m

policies. Policies include much of both the

closed book protection business and the

corporate benefits business.

• Approximately 1,900 Friends Life employees will

transfer to Diligenta

1

Long-term insurance firms remain prominent in the

top deals list, this year dominated by the $2.2bn

Friends Life deal

• The services to be supplied by Serco include:

initial underwriting through to claims

management for the AEGON Individual

Protection (AIP) suite, and policy servicing and

claims for some small 'closed books‘.

• The contract involves the transfer of 330

personnel

3

• Quindell will provide services to an intermediary

to the policyholders of six of the largest UK

insurers

• Services provided will include legal services,

medical reporting, rehabilitation, accident

management, credit hire, replacement vehicles,

and credit repair

4

• Capita has been awarded a 15-year life and

pensions administration contract extension by

Lincoln Financial Group

• The total contract is now worth £272m over 25

years

5

• Cognizant is to extend its services to include

insurance BPO

• Cognizant previously provided specific

technology systems management to ING U.S

• Cognizant is to take over 1,000 ING personnel

and two centres

2

Large UK

Insurance

Intermediary

$2.2bn 15 years New

contract Life policy services $330m 7 years Renewal

Insurance business

process services

$263m 10 years New

contract

Life policy services &

customer relationship

management

$190m 3 years New

contract P&C claims processing $168m 15 years Extension Life policy services



71 | Page

• Suncorp has awarded Genpact a contract to

provide finance and accounting services

6

There were only a limited number of large insurance

BPO contracts in 2012. The top five deals make up 95%

of the total contract value of the top ten deals

• Genpact will provide; underwriting support,

claims processing, actuarial data analytics,

technology, finance and accounting services.

• Services will be provided to Ironshore's global

operations in the United States, Canada,

Bermuda, United Kingdom and Ireland with

future expansion into additional regions

8

• CSC has been awarded a 5 year BPO contract

extension by the insurance firm Northstar

• CSC will continue to provide back office services

including policy administration, contact centres,

commission handling, quality control and remote

auditing

9

• WNS has been awarded a F&A outsourcing

contract by a leading APAC insurance company

10

• Capgemini will provide a range of F&A services

for the US, the UK, Switzerland and Germany

from its dedicated financial services BPO centre

in Poland

7 $81m 5 years

New

contract Finance & accounting $40m 5 years Renewal Finance & accounting

$20m 7 years Renewal Multi-process BPO

$15m 5 years Renewal Life policy services $11m 5 years Unknown F&A outsourcing

Leading APAC

insurance

company


Top ten banking ITO deals 2012

72 | Page

• Caixa has signed a 10-year contract with CPM

Braxis Capgemini in Brazil, with Caixa's

investment arm CaixaPar acquiring a 22% stake

• Capgemini will become Caixa's strategic IT

services provider helping them to modernise

current IT systems

1

The top five banking ITO deals are worth over 2.5

times the top five banking BPO deals

• CGI has been providing National Bank of

Canada (NBC) with application development

and support services for over 10 years

• Under the terms of the new contract, CGI will

continue to develop and maintain NBC’s

banking information systems

3

• Postbank has awarded Atos a $260m contract

to provide infrastructure management services

4

• HCL Technologies will deploy about 1,000

professionals globally to provide UBS

application services

• HCL is also setting up an offshore delivery

centre in Bangalore for UBS

5

• Atos awarded IT infrastructure management

renewal and expansion contract by its "first

German bank”

• Atos will continue to provide managed desktop

services, and will additionally provide storage,

email and server management

2 $1.3bn 10 years

New

contract Multi-scope IT outsourcing $450m 5 years Renewal


management

$350m 5 years Renewal Application outsourcing &

management

$260m 7 years New

contract Multi-Scope Infrastructure

Management $250m 5 years

New

contract Application outsourcing

Large German

Bank



73 | Page

• CSC has won an IT infrastructure management

contract extension by Australian insurance and

wealth management vendor AMP

• CSC will provide support to integrate

infrastructure of AXA Asia Pacific Holdings

which was acquired by AMP in March 2011

6

Infrastructure management accounts for almost 80% of

the cost of the whole top ten banking ITO deal cost

• Atos has been awarded an ITO contract renewal

and expansion with Morgan Stanley

• The contract is estimated to be worth c. €100m

(NelsonHall)

8

• Infosys has been awarded a 3-year $100m

testing contract by a US-headquartered financial

services client

• Services to be provided by Infosys include

performance testing and engineering and test

environment management and release

management

9

• Services to be provided by IBM include

mainframe operations and midrange server and

storage management

10

• IBM has been awarded a 10-year, $200m IT

outsourcing contract by Public Joint Stock

Company Ukrsotsbank, part of UniCredit Group

• Services to be provided by IBM include:

application development and management,

datacentre management, network and ATM

management and end-user support

7 $223m 5 years Extension


management $200m 10 years

New contract


outsourcing

$140m 3 years Renewal

& Expansion


management

$100m 3 years Unknown Application testing

Management $100m 5 years

New

contract


management

US Financial

Services firm


Top ten insurance ITO deals 2012

74 | Page

• Allianz has awarded HP a contract to manage

its desktops, network and telecommunication

services

• These services were previously delivered by

Fujitsu

• As a part of the contract HP will take over 500

AGIS employees

1

The total value of the top ten insurance ITO deals are

worth only half of the equivalent ten in banking

• Fujitsu will purchase the BCBSNC data centre

and provide a variety of Information Systems

(IS) support services to BCBSNC

• Fujitsu will provide functions such as

mainframes, servers, PCs, telephone systems,

networks and technology security

3

• BSC have renewed a contract with HP to

modernise its membership and claims

processing systems

• HP Enterprise Services will provide: hosted data

centre services, applications development &

management and network management

4

• CGI will consolidate five data centres to two

green, more cost effective data centres located

in northeast U.S

• Applications used to manage day-to-day

operations will be delivered in the cloud

5

• Old Mutual has extended an ITO contract with

TSYS, originally a 2008 5-year €150m contract

• Services include: service desk, mainframe

services, storage, end-user computing, data

centre outsourcing, mid-range outsourcing and

remote infrastructure management

2 $490m 5 years

New

contract Infrastructure

management $350m 7 years Extension Multi-scope IT outsourcing

$250m 5 years New

contract Multi-scope infrastructure

management

$220m 5 years Renewal Multi-Scope IT

Outsourcing $142m 7 years Renewal Infrastructure Outsourcing



75 | Page

• Services to be provided to RSA UK include:

application development, implementation and

ongoing maintenance for customer relationship

management, claims processing, commercial

lines products, policy management and back-

office operations

6

The market is heavily skewed to the top five deals, which

account for over 80% of the value of the top ten

• The contract involves the transfer of 25

personnel to Tieto

• Services to be provided by Tieto include

management of the client's central business

applications

• Folksam is also a client of Tieto for IT

infrastructure services and cloud computing

8

• Services to be delivered by BT include: LAN

management, WAN management, IP telephony,

contact centre services and service

management

• As part of the contract Standard Life will migrate

its infrastructure to BT's IP Connect network.

9

• Services to be provided by Tieto include:

server management, end user workplace

services, network management and service

desk

• 34 employees will transfer to Tieto Finland

10

• CGI has been awarded an IT infrastructure

management services contract renewal by P&C

insurer RSA Canada

• Services provided include: mainframe and mid-

range equipment, in addition to data storage

and recovery for RSA’s broker and customer

programmes and services

7 $100m 3 years Extension Application management $80m 6 years Renewal

Infrastructure

management services

$51m 4 years Renewal Application management

$47m 5 years New

contract Network management $46m 5 years

New

contract

Multi-Scope infrastructure

management

RSA Canada

Local Insurance

Elix-IRR Partners LLP

Level 3, 20 Abchurch Lane

London

EC4N 7BB

www.el ix- irr .com

About Elix-IRR:

Elix-IRR is a strategic advisory firm, offering

bespoke, differentiated advice to plan and execute

achievable transformation that creates

demonstrable business value. We provide

inspiration and drive at every step of the process,

from defining business strategy, through operating

model design and strategic sourcing, to the

alignment of major change initiatives. Our team is

comprised of senior professionals from top-tier

consulting and services firms, as well as

experienced practitioners from industry.

We provide insightful, practical and pragmatic

advice that leads to real results.

Trends in Outsourcing in the Financial Services Industry ... · services industry, before focusing on key trends in the outsourcing space and then continue with a number of special

Documents