Customer Experience Enhancement, Risk Management Eclipse Cost Reduction as Chief Drivers
DALLAS, January 6, 2014 — The ITO and BPO markets (Information Technology Outsourcing and Business Process Outsourcing, respectively) are healthy and growing, but the characteristics of outsourcing engagements have changed markedly. Focus has evolved beyond “lift and shift” labor arbitrage to a new emphasis upon expanded services and enhanced technologies.
The use of social media, mobility, analytics and cloud computing (SMAC) to enhance customer experience, manage risk optimally and improve efficiencies to drive greater productivity led to an 18 percent growth of ITO in the insurance vertical year-over-year. Likewise, insurers’ needs for complex work such as analytics and actuarial analysis, enhanced technologies to improve the customer experience and platform-based solutions spurred a 15 percent growth in BPO.
These findings and others are detailed in two new research reports published by Everest Group, an advisory and research firm on global services. These reports are titled:
- IT Outsourcing in Insurance – Annual Report 2013: SMAC is the Panacea for all Insurance Industry Problems and
- Insurance BPO – Annual Report 2013: In an Increasingly Volatile World, Insurance is Finding New Takers.
The reports analyze current market trends and the future outlook for outsourcing relationships for the global insurance sector. The research also captures key movements in volume/value of insurance ITO and BPO transactions, the service provider landscape, and emerging priorities of buyers, including key investment themes and solution characteristics.
The two reports share one key finding: insurers are looking to identify strategic partners who can help them develop solutions that drive efficiency and sustain the pace of technological advancement in this rapidly evolving industry.
“Buyers in the insurance vertical, traditionally considered conservative, are increasingly embracing the value shift away from cost compression in ITO and BPO. It is leading to greater focus on integrated service delivery that combines technological solution, operation excellence, and analytics-led insights,” said Rajesh Ranjan, vice president of Everest Group. “Service providers are adapting quickly, selling value including customer experience and reduced risk. These motivators allow buyers to achieve more sustainable competitive advantage and will drive ITO and BPO sourcing decisions in 2014 for the insurance vertical.”
SMAC emerged as the key theme for insurance firms for the next 12-18 months. Other key priorities are preparing for changes to the regulatory environment, expanding in emerging markets for growth, and implementing effective legacy modernization programs to improve agility and profitability.