Tag: BPO

Life & Pensions Insurance BPO Market Expected to Grow 10-12 Percent as Political Climates Stabilize | Press Release

‘Outsourcing is one of the most effective options L&P insurers are pursuing to make their operations cost effective.’

The global life and pensions (L&P) insurance business process outsourcing (BPO) market will grow at 10-12 percent in the next few years, reaching US$2.3 billion by 2017, according to Everest Group, a consulting and research firm focused on strategic IT, business services and sourcing. As political environments in the US and United Kingdom stabilize, new contract signings are expected to experience revival. Also, contracts worth approximately US$450 million will be up for renewal over the next three years.

Amid political uncertainties in the United States (due to the presidential election) and the United Kingdom (due to Brexit), the year 2015 witnessed a lower number of new contract signings compared to 2014; nevertheless, the market continued to expand steadily, driven by scope expansion of existing contracts.

In the future, evolving buyer demands will shape the market as buyers seek more efficient operations—both for cost control and compliance reasons—and more sophisticated digital services for consumers. In response, service providers will differentiate themselves by offering efficient platforms for policy administration, strengthening capabilities around digital customer acquisition, and leveraging robotic process automation (RPA). (Everest Group reports that RPA can yield incremental cost reduction that can range anywhere from 15 percent for offshore operations to as high as 45 percent for onshore operations.)

“Outsourcing is one of the most effective options L&P insurers are pursuing to make their operations cost effective,” said Skand Bhargava, practice director, Business Process Services, at Everest Group. “Outsourcing also helps insurers strengthen their presence in the digital space in order to meet the demands of the modern-day consumer.

“Buyers are looking for one-stop solutions, so service providers with the capabilities to offer end-to-end coverage of the value chain will gain momentum. In addition, buyers are looking beyond just the bottom-line impact and are focusing on top-line performance. Service providers that can help buyers improve their top-line and act as business-transformation partners will remain differentiated in the market.”

These results and other findings are explored in a recently published Everest Group report: L&P Insurance BPO – Annual Report 2016: Breaking New Grounds.”

This research examines the global non-voice, third-party L&P insurance BPO market. It provides detailed analysis of market size and growth, solution characteristics, emerging trends and the service provider landscape.

Other key findings in the report:

  • North America and the United Kingdom continue to be key geographies in the L&P insurance BPO market, with the majority of growth coming from the North American region.
  • Increasing adoption of automation, along with higher adoption of platform-based solutions within L&P insurance contracts, is reducing the FTE-intensive play in rule-based processes such as policy servicing.
  • Providers are strengthening capabilities around value-added services such as RPA, digitalization and analytics via organic and inorganic routes.
  • Regulators across the globe have been enacting a spate of laws, thereby causing a massive upheaval in the insurance sector. Insurance companies need help in setting up the systems required to support compliance with these regulations, which creates an opportunity for insurance BPO providers.
  • Adoption of outsourcing continues to increase among small- and mid-sized buyers, driven by two key reasons: (1) small- and mid-sized buyers typically lack technology platforms for L&P insurance operations, and (2) small- and mid-sized buyers seek cost-effective solutions for running operations in order to remain competitive in the market.
  • Small- and mid-sized buyers now account for more than half of the contractual activity in the L&P insurance BPO market, both by the number of contract signed and by the average contract value (ACV) of signed contracts.
  • Policy servicing and reporting continues to account for the bulk of processes managed by service providers. Claims process remains the second most dominant portion.

Banks Turn to Technology, Outsourcing in Fight for Relevance in New-Age Market | Press Release

Robotic process automation, analytics and consumer-facing technology solutions drive 10 percent growth in banking BPO market.

“If banks do not get their act right, they might soon lose their relevance,” claims Everest Group in new research addressing the business process outsourcing (BPO) market in the banking industry. The fight to remain relevant in an evolving market of new-age consumer preferences and unprecedented external pressures is driving demand in the banking industry for technology solutions and third-party assistance, as reflected in an approximately 10 percent compound annual growth rate in the banking BPO market.

Describing the future outlook for banks, Everest Group points to evolving consumer preferences, macroeconomic and regulatory pressures, and increased competition from non-traditional players. Traditional, brick-and-mortar bank branches are losing significance as consumer interest in traditional banking channels declines. Banks are also under serious pressure to reduce costs, increase profitability and respond to greater regulatory and compliance requirements. Furthermore, competition from non-traditional sources is on the rise. Financial technology companies (FinTechs) are a serious threat as they provide a better consumer experience and benefits such as ease of use and improved functionality. Also, the market for digital wallets (e.g., Apple Pay), person-to-person (P2P) transfers (e.g., Facebook Messenger and SnapCash) and new-age banking solutions (such as applications for wearables, voice-activated assistances and personalized interfaces) is growing rapidly.

“Consumer preferences are evolving fast, and banks need to align themselves with consumers’ desires,” said Anupam Jain, practice director at Everest Group. “The consumer wants their financial partner to be integrated with their daily life and to be easy to access. They want real-time advice based on their own transactions and behavior. This is why we are seeing growth in banking BPO: service providers can support banks by offering domain expertise and analytics; by leveraging technology to offer modern services; and by using tools like robotic process automation (RPA) to improve efficiency and cut costs.”

Jain points to four case studies cited in the research:

  • A leading bank in Europe replaced its in-house core banking solution with a modern core banking platform and outsourced back-office services with the aim of improving efficiency and cutting the costs of regulatory compliance.
  • A leading UK investment bank leveraged RPA to achieve 80 to 85 percent time saving in its management reporting and indexing processes
  • A leading bank was able to reduce the time needed to identify problem loans from greater than 100 hours to less than 5 minutes using an analytics solution
  • With the support of a service provider, a leading bank was able to streamline its anti money laundering (AML) process and thereby realize a 30 percent cost advantage.

Other key findings:

  • The US$3.8 billion banking BPO market is poised to grow at a steady pace of 7 to10 percent compound annual growth rate, driven by increasing adoption of technology and automation.
  • Traditional banking faces pressures from FinTechs, telecoms, retailers, etc., driving demand for innovation
  • The macroeconomic environment, regulatory concerns, changing consumer preferences, and growth in adoption of automation, analytics and risk management services are some of the key factors influencing the market
  • BPO demand drivers vary by banks’ size, with smaller banks seeking operational support and larger banks using service providers to drive regulatory initiatives.
  • Robotic Process Automation offers an opportunity for service providers to help banks in the short term by fixing broken systems and in the long term by aiding the transition to new-age systems
  • Among the service providers covered by Everest Group, Genpact, TCS and Xerox continue to dominate the banking BPO market
  • Service providers are looking for new opportunities such as delivering more complex processes to counter the fading labor arbitrage and efficiency drivers.
  • The US and UK led the establishment and growth of the BPO market. North America accounts for the highest share of global BPO revenue, followed by Continental Europe and Asia Pacific, which are driving the next growth wave.

These results and other findings are explored in a recently published Everest Group report: Banking BPO Annual Report 2016: Riding on the Digital Wave and Advancing in Automation. The report provides comprehensive coverage of the global banking BPO market including detailed analysis of market size and growth, buyer adoption trends, solution characteristics and the service provider landscape.

 

High Growth of Property & Casualty Insurance BPO Market Spurs Investment in Value-Added Services | Press Release

Healthy P&C Insurance BPO market has grown 17 percent since 2012 and is expected to grow 14 to 16 percent through 2017.

The global property and casualty (P&C) insurance business process outsourcing (BPO) market registered nearly 17 percent compound annual growth rate (CAGR) over the last few years to reach US$1.45 billion, according to new research from Everest Group. Amid political uncertainties in the United States (due to the presidential election) and the United Kingdom (due to Brexit), Everest Group expects the market to grow at 14 to 16 percent, reaching US$1.9 billion by 2017.

The growth potential of the P&C Insurance BPO market is highly attractive to service providers, but with over US$460 million up for renewals in the next three years, competition will become more intense. Everest Group advises service providers to differentiate themselves through specific value addition capabilities, particularly analytics, robotic process automation (RPA), and third-party administrator (TPA) capabilities.

  • Analytics: P&C Insurance BPO buyers are looking for a wide range of analytical capabilities, ranging from basic reporting-focused offerings to highly sophisticated predictive and prescriptive analytics solutions. Analytics solutions are particularly desired to address fraud identification and prevention. Fraudulent disclosures and claims amounted to 6 percent of total premiums in the United States in 2015.
  • RPA: P&C insurers are expecting service providers to offer RPA solutions that can automate rule-based processes. Automation solutions are being highly leveraged in claims processing as well as policy servicing and reporting, resulting in improved efficiency, faster processing, and higher accuracy. RPA can yield incremental cost reduction anywhere from 15 percent for offshore operations to as high as 45 percent for onshore operations.
  • TPA: Certain processes such as premium collection, claims adjustment and claims disbursement, particularly in the United States, require service providers to possess a TPA license for each of the states to be operational in. Service providers with TPA capabilities and relevant BPO experience will be able to offer end-to-end process coverage, including the complex pieces and therefore have a competitive advantage.

“Digitalization is another key driver that will impact this market,” said Skand Bhargava, practice director, Business Process Services, at Everest Group. “P&C insurers need to respond to the strong and growing consumer preference for digital channels, and most will turn to service providers to help them build multi-channel capability and improve time to market with these digital products and services. Digitalization is one more example of how service providers are progressively managing a larger part of the P&C value chain, far beyond claims processing.”

These results and other findings are explored in a recently published Everest Group report: “Property and Casualty Insurance BPO – Annual Report 2016: The Dawn of Transformational Era – Adapt and Evolve to Succeed.” This research examines the global non-voice, third-party, industry-specific P&C Insurance BPO. It provides detailed analysis of market size and growth, solution characteristics, emerging trends and the service provider landscape for the market.

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