Total Contract Value of IT Outsourcing in Banking Plunges 43 Percent in 2014 | Press Release

Number of large application outsourcing contracts also plummets as buyers experiment with digital technologies through smaller AO transactions

DALLAS, JULY 6, 2015 — IT outsourcing (ITO) in the banking, financial services and insurance (BFSI) industry witnessed a decline of 5 percent in number of transactions and a decline of 43 percent in total value of contracts in 2014, as buyers reduced spend due to high cost pressures from regulatory burdens.

Likewise, the demand for large banking application outsourcing (AO) contracts declined for the third consecutive year, and total contract value fell by 24 percent as buyers experimented with digital technologies through smaller AO transactions.

“In 2014, we saw three different but equally important priorities emerge for banking ITO buyers,” said Jimit Arora, vice president at Everest Group. “Banks are focusing on a triple mandate of ‘run the bank’ (focus on efficiency for cost savings), ‘manage the bank’ (focus on risk and regulatory compliance for penalty avoidance) and ‘change the bank’ (focus on transformation for growth). Accordingly, the banking ITO industry witnessed an increased demand for AO services supporting digital channel enablement, data management, and risk and compliance monitoring.”

These findings and more are discussed in a new Everest Group report, IT Outsourcing in Banking – Annual Report 2015: Riding the Digital Wave.

This report analyzes the current trends and future outlook for large, multi-year application outsourcing relationships for the global banking sector, which includes retail banking, commercial banking, credit cards, loans and mortgages (and excludes capital markets and insurance).

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High-resolution graphics illustrating key takeaways from this report can be included in news coverage, with attribution to Everest Group. Graphics include:

  • Banks’ emerging priorities have implications for IT service providers
  • The number of large AO contracts plummets
  • No easy choices among banks’ key initiatives

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