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Horizontal BPO in North American Financial Services

Product Type: Market Research Report
Published by: Datamonitor
Published: October 2005
Product Code: R313-12088
Description
Introduction
Horizontal BPO services are, overall, further advanced in terms of market development than the more sector-specific vertical BPO services. While a great deal of this development has happened in a service bureau or managed service set-up in the past, future growth will be driven by strategic horizontal BPO which emphasizes cross-functionality and process transformation.

Scope
In-depth discussion of human resources, finance and accounting and procurement outsourcing services
Detailed analysis of horizontal BPO vendors operating in the North American financial services market
Spending forecasts to 2008 for individual horizontal BPO segments across the North American financial services sector
Highlights
The transformation of business processes to increase operational efficiency is a major reason why banks consider BPO. Lowering unit costs is by far the greatest driver, illustrating that vendors in the strategic BPO space must compete on costs and that the ability to transform processes alone is unlikely to be enough to compete in this market.

In financial markets, the focus on increasing operational efficiency as revenues decrease is initiating new operational practices and is contributing to the take-up of BPO. However, the complexity of line of business-oriented organizational structures has resulted in a slower uptake than in retail banks or insurers.

Procurement is set to grow from a low base and will be characterized by a few large deals dominating the market. This space will show an increase in strategic deals drawing on a large single category client base. Procurement BPO in insurance will show the fastest growth, driven by a focus on improving efficiency in the claims fulfilment process

Reasons to Purchase
Understand drivers and barriers to take-up to enhance sales success in the FS horizontal BPO market segment
Improve positioning in the horizontal BPO market with detailed knowledge of competitors and market perceptions
Understand the dynamics and growth potential of outsourced central enterprise services to improve marketing and sales efficiency
Table of Contents
TABLE OF CONTENTS

CHAPTER 1 EXECUTIVE SUMMARY 3

Key findings 3

CHAPTER 2 MARKET CONTEXT 10

Introduction 10

Key findings 10

Introduction 12

Human resources outsourcing 13

Finance and accounting outsourcing 14

Procurement outsourcing 15

Drivers and trends 16

IT strategy drivers 16

Moving to strategic BPO 19

Centralized shared service structures 19

Increasing vendor credibility 19

Regulation 20

Global sourcing strategies 20

CHAPTER 3 COMPETITIVE DYNAMICS 22

Introduction 22

Key findings 22

Competitor identification 24

General outsourcing providers 24

Enterprise services outsourcing experts 25

Competitive structure 26

Niche providers 28

Key BPO providers 29

Process experts 30

Horizontal BPO champions 31

Emerging competitors 32

CHAPTER 4 THE FUTURE DECODED 33

Introduction 33

Key findings 33

Outsourcing market segments: procurement to grow fastest 35

Line of business trends: retail banking to grow most over period 37

Retail Banking 38

Insurance 38

Financial markets 39

CHAPTER 5 APPENDIX 40

Abbreviations 40

Forecasts and assumptions 40

What currencies are used? 40

Future readings 41

SPP writing team 41





LIST OF TABLES

Table 1: Horizontal BPO segment growth in financial services, 2004 - 2008 35

Table 2: Horizontal BPO services spend per line of business, 2004 - 2008 37



LIST OF FIGURES

Figure 1: Executive Summary - market context 3

Figure 2: Executive Summary - competitive dynamics 4

Figure 3: Executive Summary - The future decoded 5

Figure 4: Human resources outsourcing 13

Figure 5: Finance and accounting outsourcing 14

Figure 6: Procurement outsourcing 15

Figure 7: What will be the primary drivers of your IT strategy in 2005? 16

Figure 8: Which is the most important factor that would drive you to consider business process outsourcing? 17

Figure 9: Which area of outsourcing would be top priority? 18

Figure 10: Do you currently use offshore outsourcing or are you likely to consider it in the future? 21

Figure 11: Vendor heatmap 26

Figure 12: Competitive positioning 27

Figure 13: Horizontal BPO segment growth in financial services, 2004 - 2008 35

Figure 14: Line of business horizontal BPO growth in financial services, 2004 - 2008 37

CHAPTER 2



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