Outsourcing

IT & Business Process Outsourcing in FS

09.01.2003
Die Finanzdienstleister haben sich beim Thema Outsorucing bislang zurückhaltend gezeigt. Doch der Kostendruck macht auch ihnen zu schaffen. Die Erkenntnis, Haltung und Strategie überdenken zu müssen, gewinnt daher zunehmend an Boden, so Datamonitor in einer neuen Studie.

Market context

Outsourcing in financial services in this report is concerned with infrastructure, application and business process outsourcing across retail banking, insurance and financial markets. Outsourcing differs from normal external sourcing most significantly in that it is a permanent or long-term service agreement, whereby the FSI secures delivery of services the sector has traditionally supplied internally.

Although there is still much reluctance among FSIs to outsource, see Datamonitor's IT Efficiency in Financial Services, the sector is as a whole becoming less reluctant, especially in the more established and mature outsourcing areas such as desktop, network and datacenter outsourcing. In the case of vertical BPO services, however, it is clear that FSIs are still largely skeptical, viewing it as an intrusion into core operations with the potential for third-party dependency and opportunism. However, this attitude is also changing and as the BPO proposition matures and reference sites develop, demonstrating real business benefits such as reduced costs, systems flexibility and improved service, Datamonitor believes that FSIs will increasingly embrace this market.

The infrastructure outsourcing market - desktop, network, datacenter outsourcing and hosting - represented 56% of the total financial services IT and business process outsourcing market in 2002 and is by far the most developed segment in terms of size and penetration as well as maturity of market proposition and clarity of business case. At the current stage of development its relative maturity and established market proposition are contributing to driving new business as conservative FSIs become less reluctant to adopt this type of outsourcing. In the current environment the absent returns in financial markets, liquidity problems in retail banking and life and pension and continued cost cutting in property and casualty, the need for relatively risk-less cost cutting is driving new deals.

Application outsourcing - on- and off-shore application development and management and application hosting - has been growing rapidly over the last few years driven by the realization that application development is primarily skill enabled area. With the developments in off-shore application development and maintenance it is becoming increasingly apparent that significant savings through economic arbitrage/ labor costs as well as improved work quality through affordability and availability of highly skilled developers are realistically obtainable benefits. As a result of what is seen as an improved business case, interest in this outsourcing niche has increased dramatically.

Business process outsourcing (BPO) - transaction processing, back-office operations and front-office outsourcing - is the outsourcing of whole business processes integral to the FSI's core business, rather than simply individual support functions. BPO consists of IT related spend, like infrastructure and application outsourcing, but also covers the cost of the ongoing operation (non-IT labor, premises, utilities, etc.). BPO has been deemed the hot-spot of financial services outsourcing and indeed financial services IT at large, but will fail to deliver on its potential if the business proposition is not made clearer. FSIs are currently largely in doubt about the business benefit of BPO, with many unwilling to even consider it. Thus, whereas Datamonitor believes that the scope for BPO services in European FS is virtually untapped, it is clear that in most niche markets vendor strategy and business benefits offered to the FSIs will have to be improved, as FSIs have branded them confusing and ill-defined, in order to tap into this market and continue the trend of reducing FSI reluctance to the concept.

In sum, however, the BPO segment will perform impressively over the next few years on current FSI attitudes to BPO alone, although this market potential can be grown significantly by improving the clarity of strategy and benefits as well as creating successful reference sites.

FSIs' outsourcing concerns

Recent Datamonitor research, see Datamonitor's IT Efficiency in Financial Services, revealed that while the majority of FSIs do in fact outsource some function or other, by far the majority rejects each individual type of outsourcing. This suggests that FSI take-up of outsourcing services will continue to be gradual, rejecting the hyperbole surrounding outsourcing and its take-up, and FSIs are seeking actual proof that the benefits promised can be delivered in terms of costs and reliability.

The future decoded: 2003-2005

The outsourcing market as a whole is set to continue to grow faster than the overall financial services IT market, but growth stories vary dependent on market segment within the outsourcing market. Datamonitor believes that, while more established and mature growth will continue to be strong in the more traditional outsourcing segments as FSIs become less wary of increasingly mature business propositions, the less developed outsourcing segments will require further refinement with clearer messages being sent to the FSI community in terms of business benefit and actual execution strategy.

Der vollständige Bericht kann bei Datamonitor bestellt werden.