Role of Global Sourcing in Financial Services BPO (FS BPO)
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Role of Global Sourcing in Financial Services BPO (FS BPO)

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Everest Group research analysts will provide a comprehensive view on mature and emerging delivery locations across the globe as well as analyze the prevalent sourcing models, drivers, and challenges ...

Everest Group research analysts will provide a comprehensive view on mature and emerging delivery locations across the globe as well as analyze the prevalent sourcing models, drivers, and challenges for global sourcing in FS BPO.

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    Role of Global Sourcing in Financial Services BPO (FS BPO) Role of Global Sourcing in Financial Services BPO (FS BPO) Presentation Transcript

    • Today’s Webinar is brought to you by Everest GroupToday’s WebinarRole of Global Sourcing in Financial Services BPO (FS BPO)Synopsis: Everest Group research analysts will provide a comprehensive view on matureand emerging delivery locations across the globe as well as analyze the prevalentsourcing models, drivers, and challenges for global sourcing in FS BPO.About Everest GroupEverest Group is an advisor to business leaders on global services with a worldwide reputation for helpingGlobal 1000 firms dramatically improve their performance by optimizing their back- and middle-office businessservices. With a fact-based approach driving outcomes, Everest Group counsels organizations with complexchallenges related to the use and delivery of global services in their pursuits to balance short-term needs withlong-term goals. Through its practical consulting, original research and industry resource services, EverestGroup helps clients maximize value from internal transformations, shared services, outsourcing and blendedmodel strategies. Established in 1991, Everest Group serves users of global services, providers of services,country organizations and private equity firms, in six continents across all industry categories. For moreinformation, please visit www.everestgrp.com and www.everestresearchinstitute.com.For more information, contact Mark Williamson at mark.williamson@everestgrp.com 1 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • Q&ATo ask a question during the Q&A session Click the question mark (Q&A) button located on the floating tool bar in the bottom right of your screen – this will open the Q&A Panel Be sure to keep the default set to “send to a Panelist” Then, type your question in the rectangular field at the bottom of the Q&A box and click the send button to submit 2 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • Role of Global Sourcing in FinancialServices BPO (FS BPO)WebinarApril 19, 2011
    • Introductions Saurabh Gupta Vice President Everest Group saurabh.gupta@everestgrp.com Abhishek Menon Senior Research Analyst Everest Group abhishek.menon@everestgrp.com 4 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • In today’s session, we will cover four key aspects ofglobal sourcing in FS BPO Process maturity  Maturity of functions and processes represented as being mature, credible, and emergingGlobal sourcing models and trends Location landscape Global sourcing models Global  Scale and growth of global Global sourcing market size, sourcing in sourcing in key locations over time growth, and potential FS BPO  Key cities in each country with Drivers and challenges to global global sourcing footprint sourcing Service provider landscape  Assessment of global sourcing capabilities of service providers across scale, growth, global sourcing leverage, and delivery footprint 5 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • Everest Group’s definition of financial servicesincludes the following three segments Financial servicesBanking Capital markets Insurance Retail financial services  Investment banking  Life and pensions (B2C1)  Retail banking  Asset management  Property and casualty  Lending  Cards  Custody  Health insurance (payers) Commercial banking (B2B2)  Fund administration Note: This session covers global sourcing in vertical-specific FS BPO across banking, capital markets, and insurance. It does not include coverage of horizontal business processes like F&A, HR, procurement and contact centers1 Business-to-consumer relationships2 Business-to-business relationships 6 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • Today’s session is focused on global sourcing in FSBPO – sourcing services from a global market acrossgeopolitical boundaries Onshore-source geographies Offshore global sourcing geographies Nearshore global sourcing geographies North UK Eastern America Europe Western Europe China Japan India South East Asia Central & South America AustraliaSource: Everest Group (2011) 7 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • Financial Services account for 40% of the fast growingUS$40 billion+ global sourcing BPO marketGlobal sourcing market size for BPO2004-2010; US$ billion 2010 global sourcing BPO market share by industry 40-42 Percentage of total market 100% = US$40-42 billion Financial 10-12 40% services Other 60% industries 2004 2010 1 Compounded Annual Growth Rate 2 Non-voice includes horizontal ( e.g., HR, F&A, procurement, etc.) as well as FS vertical-specific processesSource: Everest Group (2011) 8 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • The potential for growth of global sourcing in FS BPOis significant – nearly 15 times or ~US$250 billionOffshore Financial Services BPO market opportunityUS$ 3.7 trillion Current and potential offshore FS BPO market US$ billion 245-265 450-500 billion US$245-265 billion 16-18 Current Addressable offshore FS offshore FS Total cost Non- Total BPO Addressable BPO market BPO market base of FS offshorable offshore market not offshore FS size (2010) opportunity companies cost base FS BPO amenable BPO market in source opportunity to capture opportunity marketsSource: Everest Group (2011) 9 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • There are multiple operating-model alternatives thatprovide different forms of value and risks, and can beonshore, nearshore, or offshore Operating model alternatives Retained, optimized models Alliance based models Outsource (third-party) models Shared services model Build operate transfer (BOT) Outsourcing Captive model Joint venture (JV) Offshore outsourcingMost large financial services companies choose a “value-added hybrid” approach – adopting a combination of internaland third-party based modelThe session today focuses on offshore outsourcing in third-party sourcing models. It does not provide detailed coverageof captives and internal shared servicesSource: Everest Group (2011) 10 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • Third-party global sourcing in FS BPO is growing at20%+ annuallyScale of offshore and nearshore operations in FS BPOBased on number of FTEs of 25+ third-party service  Banking BPO is the largest FSproviders BPO segment accounting for nearly 50% of the overall scale of 87,000 global sourcing operations within 73,500 FS BPO 60,000  Capital markets represent the fastest growing segment within FS BPO. Scale of offshore and nearshore operations of capital markets BPO witnessed a YoY 2008 2009 2010 growth of ~40% in 2009-2010Sample size: Based on information on 25+ service providers including Accenture, ACS, Amba, Capgemini, Copal Partners, CSC, eClerx, Evalueserve, EXL Service, Firstsource, FIS, Genpact, HCL, HP, IBM, Infosys BPO, Intelenet, Irevna, Polaris BPO, TCS, TSYS, Wipro, WNS, Xchanging, and Zenta Source: Everest Group (2011) 11 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • There are multiple drivers to global sourcing in FSBPO. Despite the recent economic turmoil, impact onadoption of global sourcing has been minimal Beyond arbitrage-led savings, Stakeholders have adapted there are multiple other drivers and managed new and to global sourcing in FS BPO emerging challenges around global sourcing in FS BPO LegislativeCost arbitrage Access to talent pool challenges in FS BPO sourcing in FS BPO Operational Drivers of global Risk Global sourcing diversification Improving service levels People related Operational flexibilitySource: Everest Group (2011) 12 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • Banking and insurance are the most mature whilecapital markets is the least mature FS BPO segmentfrom a global sourcing standpoint Global sourcing market maturity of ITO and BPO markets Phase 1 Phase 2 Phase 3 Pioneer Rapid growth Reaching maturity Market value creation IO ADM Banking BPO FAO Insurance BPO HRO PO Capital markets BPO Stage of market evolutionSource: Everest Group (2011) 13 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • Banking and insurance are the most mature whilecapital markets is the least mature FS BPO segmentfrom a global sourcing standpointGlobal sourcing process maturity in banking BPO Mature Credible Emerging Product Channel Business Account Transaction Treasury Control/ Institutional Merchant Marketing development management acquisitions servicing processing operations compliance relationships services Knowledge servicesGlobal sourcing process maturity in capital markets BPO Product Channel Business Account Registrar/ Investment Fund Control/ Marketing development Management acquisitions servicing transfer agency operations administration compliance Knowledge servicesGlobal sourcing process maturity in insurance BPO Product development Policy servicing and business New business Claims processing and reporting acquisition Knowledge servicesSource: Everest Group (2011) 14 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • India, Philippines, and China are mature locations forFS BPO NOT EXHAUSTIVEMaturity of delivery location for FS BPO servicesBased on scale of operations of 25+ third-party service providers Nascent Emerging Mature Central & Eastern Europe Poland Hungary Romania China Central & South America Mexico India Jamaica Guatemala Costa Rica Ghana Sri Lanka Philippines Ecuador Brazil South Africa Chile ArgentinaSample size: Based on information on 25+ service providers active in the FS BPO space including Accenture, ACS, Amba, Capgemini, Copal Partners, CSC, eClerx, Evalueserve, EXL Service, Firstsource, FIS, Genpact, HCL, HP, IBM, Infosys BPO, Intelenet, Irevna, Polaris BPO, Syntel, TCS, TSYS, Wipro, WNS, Xchanging, and Zenta Source: Everest Group (2011) 15 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • Central & South America along with Eastern Europe arewitnessing the fastest growth, although on a lower base 2008Global sourcing in FS BPO locations over time 2010Based on number of FTEs for 25+ third-party service providers XX% 2008-10 growth 71,000 48,000 7,000 8,500 7,300 4,700 150 250 100 150 India China & South East Central & South Eastern Europe Africa Asia AmericaSample size: Based on information on 25+ service providers active in the FS BPO space including Accenture, ACS, Amba, Capgemini, Copal Partners, CSC, eClerx, Evalueserve, EXL Service, Firstsource, FIS, Genpact, HCL, HP, IBM, Infosys BPO, Intelenet, Irevna, Polaris BPO, Syntel, TCS, TSYS, Wipro, WNS, Xchanging, and Zenta Source: Everest Group (2011) 16 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • Everest analyzed the global sourcing leverage for FSBPO of 15 service providers for each business segmentService providers assessed Leading service providers based on global sourcing capability in FS BPO Assessment criteria Banking BPO Capital markets BPO Insurance BPO  Global sourcing scale  Global sourcing growth  Global sourcing leverage  Global delivery footprintSource: Everest Group (2011) 17 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • Key takeaways FS BPO accounts for 40% of the US$40 billion global sourcing market – but there is still huge untapped potential Despite the various challenges post the economic turmoil, third-party global sourcing in FS BPO has experienced over 20% growth from 2008-2010 Banking BPO represents the largest FS BPO segment. Despite a slowdown in business acquisition related activity during the last few years, third-party global sourcing in banking BPO continues to increase at ~20% annually Insurance BPO represents the most mature FS BPO segment from a global sourcing perspective with high degree of process penetration, mature offerings, and high degree of process standardization Capital markets BPO is relatively less mature but represents the fastest growing segment within FS BPO There are multiple global sourcing operating models (internal and third-party). Most large financial services companies adopt a value-added hybrid model for BPO India, Philippines, and China are mature locations for FS BPO, while Eastern Europe and Central & South America are witnessing the fastest growth, although on a lower base 18 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • Forthcoming and published research in FS BPO PublishedTitle Release Date The Growing Maturity of Offshore Research and Analytics in  July 2010 Financial Services Global Lending BPO Across Credit Cards, Consumer Loans, and  January 2011 Commercial Loans Financial Services BPO (FS BPO) Service Provider Profile  March 2011 Compendium Role of Global Sourcing in FS BPO - Significant Traction, Yet  April 2011 Tremendous Potential Insurance BPO market overview  Q2 2011 Global third party BPO supplier landscape in Capital Markets  Q3 2011 19 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • Q&A Please use the Q&A toolbar at the bottom right corner of your screen Upcoming Webinar RPO Market Undergoes Explosive Growth Opportunities and Challenges AheadDate: Thursday, April 28, 2011Time: 9:00 a.m. CDT; 10:00 a.m. EDT; 2:00 p.m. GMTPresenters: Rajesh Ranjan – Research Director, Everest Group Sayan Chatterjee – Senior Research Analyst, Everest GroupMore Information: Visit www.everestgrp.com/category/webinars 20 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • For more information Attendees will receive an email with a link to download today’s webinar presentation. To access a recorded audio version of this webinar, please contact Mark Williamson, mark.williamson@everestgrp.com For more information related to today’s topic, please contact:  Saurabh Gupta, Vice President, saurabh.gupta@everestgrp.com  Rajesh Ranjan, Research Director, rajesh.ranjan@everestgrp.com  Abhishek Menon, Senior Research Analyst, abhishek.menon@everestgrp.com  FS BPO Team, FSBPOResearch@everestgrp.com For background information on Everest Group, please visit:  www.everestgrp.com  www.everestresearchinstitute.com Thank you for attending today’s presentation 21 Proprietary & Confidential. © 2011, Everest Global, Inc.
    • Everest Group leads clients from insight to actionContact us for more information about our consulting, research, and industry resources. Dallas (Corporate Headquarters) Canada info@everestgrp.com canada@everestgrp.com info@everestresearchinstitute.com +1-416-865-2033 +1-214-451-3000 +1-214-451-3110New York India/Middle Eastinfo@everestgrp.com india@everestgrp.com+1-646-805-4000 +91-124-496-1000 +91-124-496-1100 UK Netherlands & Continental Europe unitedkingdom@everestgrp.com benelux@everestgrp.com +44-870-770-0270 +31-20-301-2138www.everestgrp.com | www.everestresearchinstitute.com | www.sherpasinblueshirts.com 22 Proprietary & Confidential. © 2011, Everest Global, Inc.