20 Percent Growth in Capital Markets Business Process Outsourcing (BPO) Creates Rich Opportunity for Tech-Savvy Service Providers—Everest Group

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Cost-reducing technology solutions are price of entry, but value-added technology solutions such as advanced analytics will differentiate, determine leaders in capital markets BPO.

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The market is signaling higher rewards for providers who can beef up their offerings with domain expertise and/or analytics capabilities and leverage technology to bring these capabilities to the market

The market for third-party business process outsourcing (BPO) in capital markets reached US$1.9 billion in 2015, growing at a compound annual growth rate (CAGR) of 18-20 percent over last three years, according to Everest Group, a consulting and research firm focused on strategic IT, business services and sourcing.

Buyers in the capital markets industry (comprising investment banking, asset management, custody and fund administration, and brokerage) are feeling challenged by changes on a number of fronts. They are experiencing the squeeze of slimmer margins, stagnant revenues, stiffer compliance regulations, increased competition from new entrants with strong technology-based capabilities (i.e., “FinTech” companies), and the changing demands of tech-savvy millennial customers. In addition, technologies such as robo advisors, blockchain and analytics have the potential to disrupt the industry, and the ramifications of Brexit remain uncertain. Everest Group predicts that buyers will increasingly turn to technology-savvy service providers for assistance in navigating this evolving and changing landscape.

For service providers, the adoption of cost-reducing, efficiency enhancing technology solutions such robotic process automation (RPA) remains vitally important, but value-added technology solutions such as advanced analytics will be key differentiators in the market.

“The capital markets BPO segment represents significant opportunity for service providers, especially those who understand that buyers are looking to service providers to enhance business value, rather than simply as a means to reduce costs,” said Anupam Jain, practice director, Business Process Services, at Everest Group. “The market is signaling higher rewards for providers who can beef up their offerings with domain expertise and/or analytics capabilities and leverage technology to bring these capabilities to the market.”

Everest Group has identified Cognizant, TCS and Wipro as industry leaders among 19 capital markets BPO service providers in its 2016 PEAK Matrix™ report, which evaluates service providers in terms of their market success and delivery capabilities. These three firms collectively accounted for almost 55 percent of the growth in capital markets BPO in 2015.

These results and other findings are explored in a recently published Everest Group report: “Capital Markets BPO Annual Report 2016 - Managing Risk and Unlocking Efficiency through Technology.”

The report provides comprehensive coverage of the global capital markets BPO space, including detailed analysis of the state of the market, market trends and solution characteristics, service provider landscape and future outlook.

Other key findings in the report:

  • Investment banking and custody and fund administration are driving growth in capital markets BPO.
  • Although a few players have a large presence in this space in general, each line of business is dominated by a different player.
  • Technology has lowered entry barriers, making it imperative for established players to focus on innovation to stay competitive.
  • North America and United Kingdom are the major growth drivers with their substantially sized markets and above-average growth rates.
  • United Kingdom and Continental Europe are witnessing high growth and are expected to continue to do so in a strict, maturing regulatory environment.
  • The post-Brexit regulatory environment in Europe is likely to have a significant effect on the BPO industry and will shape outsourcing relationships going forward.
  • The shifting value chain, the increasing role of technology, and changing consumer needs and demographics are some of the factors shaping capital markets and, consequently, the outsourcing relationships of capital markets players.

About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empower clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at http://www.evererstgrp.com.

Contact:
Andrea M. Riffle, Everest Group
andrea(dot)riffle(at)everestgrp(dot)com

Robert Cathey, Cathey Communications
+1-865-386-6118
robert(at)cathey(dot)co

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Andrea M. Riffle

Robert Cathey
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