INTRODUCTION

The BFSI industry continues to be the largest adopter of the IT Application Outsourcing (AO) services. However, the industry dynamics have changed significantly over the last 12 to 24 months. BFSI buyers are facing increasing pressure to drive top-line growth, manage complexity arising out of wide-scale regulatory reforms, and improve profitability by driving greater cost efficiencies. To achieve this, buyers are focusing on optimizing their portfolios of AO service providers.

At the same time, service providers in the BFSI-AO space also ramped up their capabilities, built up scale, and invested in developing and acquiring IP/proprietary solutions. They also formed alliances that allow them to undertake and deliver on large-sized, annuity AO engagements. The competitive intensity in the BFSI AO services space is at an all-time high. As a result, it is becoming difficult to differentiate service providers purely based on delivery capability. It is, therefore, critical to have a comprehensive, well-rounded, and fact-based assessment of service providers’ BFSI-AO value proposition.

In this report, we analyze the capabilities of 20 leading AO service providers specific to the global insurance sector. These providers were mapped on Everest Group’s Performance | Experience | Ability | Knowledge (PEAK) Matrix, which is a composite index of a range of distinct metrics related to a provider’s capability and market success. In this report, we focus on:

• The landscape of service providers for insurance AO
• Assessment of service providers on a number of capability-related dimensions
• Characteristics of Leaders, Major Contenders, and Emerging Players on Everest Group insurance AO PEAK Matrix
• 2012 “Star Performers”, that is, providers with the strongest forward movement over time – both in terms of market success and capability advancements
• Implications for insurance and service providers

SCOPE

• Industry: Insurance (life, annuities, and pensions; property and casualty insurance); excludes banking, capital markets, and healthcare payers
• Services: Large (TCV >US$25 million), multi-year (>three years), annuity-based application outsourcing
• Geography: Global
• Service providers: Twenty leading insurance AO service providers

CONTENTS

This report is structured across three key sections, each containing insights on the insurance AO service provider landscape, focusing on large-sized contracts:

• Insurance AO service provider landscape: Analysis of individual service provider capability and service provider groups across the following dimensions:
  • Scale
  • Scope
  • Domain investments
  • Delivery footprint
  • Market success
• Insurance AO PEAK characteristics: Analysis of each of the categories on Everest Group’s PEAK Matrix –Leaders, Major Contenders, and Emerging Players. Additionally, this year’s report focuses on identifying the 2012 “Star Performers” in the insurance AO space. Key aspects covered include:
  • Commentary on the capabilities of each service provider
  • Delivery capability characteristics (scale, scope, domain investments, and delivery footprint)
  • 2012 “Star Performers” analysis
  • Market success characteristics (transaction activity)
• Implications for key stakeholders: Implications of trends on buyers and service providers

Some of the findings in this report, among others, are:

• The service provider landscape for insurance AO services is segmented into four major categories of providers: global majors, offshore majors, regional players, and tier-2 Indian providers
• Despite the challenging economic environment, average insurance AO revenue expanded significantly for large global and offshore service providers in 2011
• While the average number of clients for most providers increased last year, average duration of contracts witnessed a decline. Average number of clients for tier-2 Indian providers doubled in 2011
• Providers across all categories witnessed increased activity in the life, annuities, and pensions as compared to the P&C segment
• YoY revenue growth and client addition was strongest amongst offshore majors
• PEAK clusters’ characteristics: Leaders dominated the insurance AO industry, accounting for about two-thirds of all contracts signed as well as the ACV; all the three provider categories on PEAK increased their share of multi-region/global insurance AO contracts; Major Contenders dominated the large insurance AO deal activity in 2011