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

Posted On October 9, 2013

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

DALLAS, October 9, 2013 — 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)

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