The banking financial services and insurance (or BFSI) deals seem to be under tremendous pressure in 2012.
The $100-110 billion BFSI IT outsourcing market continues to be the largest industry segment of the global IT outsourcing industry.
A declining market for BFSI deals masks a fundamental shift in how large application outsourcing deals are procured and managed, research firm Everest Group said in a latest study.
“While the number of BFSI outsourcing transactions remained almost flat, total contract value witnessed a decline as compared to last year. Majority of outsourcing deals in this vertical originated from EMEA (Europe, Middle-East, and Africa), while North America witnessed continuous decline over the past three years,” the report IT Outsourcing in Banking – Annual Report 2013 said.
Banking application outsourcing
“The number of large application outsourcing deals remained almost flat in banking, while the value to total contracts increased significantly in 2012. The demand for application maintenance services increased, as banking buyers continued to focus on cost containment,” it said.
Outsourcing in retail and commercial banking declined in 2012. Outsourcing in the cards and lending business segments increased, the report pointed out.
The report studied application outsourcing contracts over $25 million in total contract value and more than three years in duration. The report analyses key trends in market size and growth, demand drivers, adoption and scope trends, emerging priorities of buyers, key investment themes and outlook with regard to large banking AO deals.
“In 2012, BFSI buyers continued to remain under pressure to increase revenue, enhance customer experience, reduce costs, replace legacy systems, and meet regulatory requirements,” the report said.
To address these challenges, most banks focused on investments in next-generation technologies such as social media, mobility, big data and analytics, and cloud computing in order to enhance customer experience while simultaneously reducing their operational costs.