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Banking and Financial Services Offshoring: From Transaction Processing to Analytics
ValueNotes, July 2006, Pages: 90
According to estimates by Pune-based outsourcing research, India is the preferred BPO destination for offshoring banking and financial services (BFS), earning $1.83 billion in revenues and employing 125,000 persons in 2005-06.
With growth rates of 30 to 35%, India's revenues from banking and financial services offshoring is likely to reach $6.5 billion by FY2011. However, this is still a fraction of the 'offshoreable' market potential. Arun Jethmalani. 'Growth in Indian offshore revenues from the BFS vertical will outpace overall BPO growth, driven by expansion into higher value services, especially research and analytics'.
Almost 50% of the world's biggest banks in terms of asset size already have significant presence in India. The smaller, regional banks are also expected to take to offshoring in a big way in future. The need to manage increasingly complex global operations in a cost-effective manner, and added workload due to regulatory compliance such as SOX, Spitzer's Settlement ruling and Basel II norms are major offshoring drivers.
The offshore vendor landscape is made up of:
Captives of MNC banks and financial institutions such as Morgan Stanley, JP Morgan, Goldman Sachs, Lehman Brothers,TSB Lloyds, Scope International
Among third party players are:
Large multi-service companies like Genpact, EXL Service, WNS;
Multi-service BPOs with IT parents such as Wipro BPO, Progeon, MphasiS BPO and iGate;
Large KPOs such as Evalueserve, OPI and Integreon
Large players and niche specialists are best positioned to exploit the large opportunity.
Ribhu Ranjan, analyst and co-author of the report expects that going forward, regional and mid-tier financial firms the world over will adopt a multi-location, multi-vendor offshoring model, signaling a preference for global sourcing.
The report provides an overview of the buyer scenario and an in-depth analysis of the Indian vendor space along with profiles of major industry players. The report is designed to help:
- Banking and Financial Services firms looking to outsource/offshore
- Outsourcing consultants to evaluate and compare the offerings of vendors
- Banking and Financial Services vendors to assess their competitive environment
- Venture Capital companies looking for investment opportunities
- Researchers looking for detailed information on financial services offshoring
This study is based on secondary data as well as extensive interviews with key people at various BPOs (captive as well as third-party) in India.
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