- Outsourcing News
- Outsourcing Press-Releases
- Outsourcing Events
- Outsourcing Analytics
Everest Group: Significant traction of global sourcing in Financial Services BPO, yet tremendous untapped opportunity
Global sourcing adoption growth potential nearly 15 times current size
DALLAS, April 14, 2011 ─Global sourcing of Business Process Outsourcing in the financial services sector (FS BPO), a US$16-18 billion market comprising nearly 40 percent of the US$40 billion global sourcing market, has the potential to grow nearly 15 times its current market size to reach US$250 billion, according to a study by Everest Group, a global consulting and research firm.
The report includes an analysis of market size, growth and potential of global sourcing of FS BPO across the banking, capital markets and insurance segments. Research analysts will hold a one-hour Webinar on April 19, 9 a.m. CDT, to present study findings and insights.
Everest Group’s study, Role of Global Sourcing in Financial Services BPO, includes an analysis of labor savings and other factors that have propelled FS BPO adoption into the rapid growth stage. Global sourcing of BPO in the capital markets segment represents the fastest growth area, driven by the emergence of high-end judgmental work and analytics.
Insurance BPO demand is being fueled by a greater need for analytics, an increased need in the United States for healthcare services resulting from a growing customer base spurred by reform legislation, and Solvency II implementation in the European Union.
BPO adoption in the banking sector is led by United States firms that are increasing global sourcing to meet fiscal performance pressures as well as address the lack of opportunity in new account acquisitions offset by loan modification servicing needs.
“BPO emerged as the key growth driver in the 2010 third-party financial services outsourcing market with nearly a 50-50 split between ITO and BPO contracts as opposed to a 70-30 split in 2008-2009,” said Saurabh Gupta, vice president, Research. “In the current economic scenario where financial services companies are facing competitive pressures and are reconsidering their cost bases, BPO across industry-specific processes in banking, capital markets, and insurance is generating much interest. Our analysis finds the medium to long-term growth outlook to be significant and robust.”
“Despite significant challenges, such as constraints in the United States associated with the Troubled Asset Relief Program (TARP) and new data protection measures in the European Union, the impact on global sourcing has been minimal,” said Rajesh Ranjan, research director and co-author of the report. “Financial services firms and service providers have adapted and properly mitigated against new and emerging challenges.”
Other study findings include:
Everest Group analyzed FS BPO capabilities of 15 service providers for each business segment. Service providers with the strongest global sourcing capabilities are Genpact, HP and TCS for banking BPO; Infosys BPO, TCS, and Wipro for capital markets BPO; and Accenture, EXL Services, and WNS for insurance BPO. Other services providers examined in the study were Capgemini, CSC, eClerx, HCL, Intelenet, Syntel and Xchanging.