Total Contract Value Falls 25 Percent for Capital Markets ITO Deals, Driven by Economic Uncertainty: Everest Group Annual Report

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Next-gen technology themes being leveraged by buyers to tackle emerging business challenges of a tougher operating environment, and increasingly demanding customers

Jimit Arora, vice president, Everest Group

Jimit Arora, vice president, Everest Group

Capital markets firms are investing in innovative solutions to transform their business models, and also are trying out cross product integration.

While capital markets ITO remains the smallest vertical in the BFSI ITO space, it is witnessing increased adoption of outsourcing as buyers face challenges related to evolving regulatory requirements and profitability pressures, according to new research published by Everest Group.

To address these challenges, capital markets buyers are focusing on several tactics. These include operational efficiency, resulting in widespread cost-saving initiatives. Also, they are enhancing and growing their customer base through investments in technologies such as social media, mobility, big data/analytics, and cloud computing.

Overall, the capital markets IT segment grew from US$10-12 billion in 2011 to US$15-20 billion in 2012. Despite this healthy growth in industry spending, there were select cases of IT spending being cut by a few large capital market firms as projects commissioned over last 3-4 years ended.

The data are included in a new report issued by Everest Group, an advisory and research firm on global services. The report, IT Outsourcing in Capital Markets – Annual Report 2013: Deploying Technology to Counter Environmental Challenge, focuses on trends in AO in the BFSI segment, market trends for large AO deals in capital markets, emerging buyer priorities, and important movements in volume/value of capital markets AO transactions over the past 12 months.

“Capital markets firms are investing in innovative solutions to transform their business models, and also are trying out cross product integration,” said Jimit Arora, vice president at Everest Group who leads the report team. “A growing need for robust risk management, and higher standards in reporting, ensuring transparency are also important drivers for AO demand within this vertical.”

In this research, Everest Group analyzes the current trends and the future outlook for large, multi-year application outsourcing relationships for the global capital markets sector. The scope of the report’s analysis includes:

  •     Industry: Capital markets (investment banking, asset management custody and funds administration, and brokerage services); excludes retail and commercial banking, insurance (life, annuity, pensions, and P&C), and healthcare payers
  •     Services: Large (TCV > US$25 million), multi-year (>three years), and annuity-based application outsourcing
  •     Geography: Global
  •     Sourcing model: Third-party AO transactions; excludes shared services or Global In-house Centers (GICs)

About Everest Group
Everest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With a fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and delivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting, original research and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing models, technologies and management approaches. 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 more information, please visit http://www.everestgrp.com and research.everestgrp.com.

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