TCS recognised as a leader in European banking and capital markets application outsourcing services

February 19th, 2015 by Rahul Jain No comments »

Tata Consultancy Services (TCS), (BSE: 532540, NSE: TCS), one of the leading global IT services, consulting and business solutions organisations, on February 17 announced that it has been recognised as a leader in banking and capital markets application outsourcing services (AO) in Europe by one of the leading advisory and research firms Everest Group in two reports – Everest Group PEAK Matrix: European Banking IT Outsourcing Service Providers’ Assessment 2014 and Everest Group PEAK Matrix: European Capital Markets IT Outsourcing Service Providers’ Assessment 2014.Outsourcing52

TCS helps businesses operating in capital markets and banking industries optimise investments, enhance operational efficiencies, minimise risk and maintain competitive pricing. In both its banking and capital markets IT outsourcing reports, Everest Group praised TCS’ scale, scope and domain investments, which were recognised as a major contributor to the company’s success, according to Tata.

Jimit Arora, vice president, Everest Group, commented: “The European banking industry has seen a strong return in discretionary spending in areas such as application development for customer centricity, digital technologies, and regulatory compliance. Demand for IT outsourcing grew within capital markets in Europe as firms leveraged technology for regulatory compliance, to cut costs and drive efficiency.TCS’ Leader position reflects its comprehensive offering and ability to deliver effectively for clients.”

Susheel Vasudevan, head banking and financial services, TCS, commented: “It feels special to be once again recognised as a leader in european banking and capital markets application outsourcing services by Everest Group. This recognition highlights the strong market success and continued domain investments we have made in the financial services industry. We work closely with our financial services customers, helping them to drive efficiencies and embrace the changes required in this new digital era.”

The Everest Group evaluated 20 vendors for its banking IT outsourcing report and 18 for its capital markets IT outsourcing report. The vendors were mapped against Everest Group’s Performance, Experience, Ability, Knowledge (PEAK) Matrix, which is a composite index of several distinct metrics related to a provider’s capabilities and market success. Service providers are then split into three categories: Leaders, Major Contenders and Emerging Players. The Everest Group also profiled the capabilities of these leading service providers in detail, giving a comprehensive overview of their service scope, scale of operations, domain investments, delivery footprints and market success.


Choosing an ‘outsourced’ investment solution

February 18th, 2015 by Rahul Jain No comments »

Over the past couple of years, financial adviser resources have been squeezed to the extent that a number have decided to look to outsourcing solutions for investments for some clients. There are two main reasons for this trend.Outsourcing71

One is that, post-RDR, new research and compliance requirements have increased and at the same time product providers have come up with an increasing number of products, often more complex solutions.

Add to this the increased cost needed in terms of governance and regulatory compliance, and it can be cheap and arguably safer to outsource the investment function to a third-party specialist.

When advisory firms consider outsourcing their investment propositions, they can look at a number of options, such as multi-asset funds and discretionary solutions, and even multi-asset funds with a discretionary service attached to it.

In some cases they are seeking a ‘centralised’, or standardised, solution for lower-value clients to manage risk cost-effectively; in others a more bespoke solution is being sought that caters to the needs of higher-net worth customers.

The main reason for choosing a multi-asset over a discretionary solution is that multi-asset funds usually require much lower minimum investment sizes, often £1,000 or less, and fees are generally better expressed.

Beyond this, there can be other, more subtle differences between the two, so much so the lines between the two could be said to be blurring.

If an adviser decides to ‘outsource’ to a multi-asset fund they need to be confident that it does what it says on the tin
A flexible solution

The idea behind investing in a collective is that investor monies are pooled together and everyone benefits from the same investment portfolio. This very simple notion is at the heart of making sure that each client segment has basically the same portfolio and that investment decisions are applied consistently and at the same time.

Pooled monies often give investors access to solutions that require larger minimum commitments than an individual of the investor group would have been able to afford – and the manager of the pool typically has more power to negotiate costs and fees, which are then shared out among the investors.

Multi-asset funds give advisers an outsourcing solution that can be deployed across a variety of client segments, with multiple charging points, enabling ring-fencing of assets and providing access to a compensation scheme.

Of course, if an adviser decides to ‘outsource’ to a multi-asset fund they need to be confident that it does what it says on the tin. In other words, adviser cannot choose a fund for its name or managers’ reputation alone, they need to do detailed due diligence and see whether the fund has delivered on its promise.

Empirically, this means delivering on the stated investment mandate. Consideration should be given to the cost structure as charges can be higher with multi-asset funds. Picking multi-manager funds, which adds a best-of-breed sub-advisory element to the proposition, also comes with an extra layer of charges.

Researching funds

Historically, differentiation between funds was difficult. Charges were the same, areas of investment focus and style were similar; performance or return invariably became the main filter.

Nowadays, as client desired outcome, attitude to risk and capacity for loss can vary significantly, providers have come up with a wide range of funds to help advisers provide suitable solutions for their various client segments. This has left advisers with the huge task to pick solutions for their clients from a complex universe.

This infographic gives advisers a starting point in their research process. It defines the landscape and helps you map out a way to client solutions. To further help, Defaqto and other research agencies provide ratings services, which group together criteria we believe are important for the particular grouping.

We segment funds in many different ways, including whether they are return-focused or risk-targeted, multi-manager or direct (single-manager). A direct fund is where one fund manager or team manages all the investments in the fund, while with multi-manager funds different fund managers are used for different asset classes.

Funds are further categorised into predominantly active or passive, based around the Investment Association sector they’re part of in the case of return-focused, and by asset class in the case of passive funds. Passive funds include both traditional funds (Oeics/UTs) and the more recent exchange-traded funds or ETFs.

We believe that this level of granularity in the research process is necessary to build up a complete picture and compare like with like.

What the infographic visualises is that multi-asset funds come in various shapes and sizes. With over 500 UK-authorised funds available, comprising nearly 2,000 share classes, the landscape certainly offers plenty of choice.

To give this more context, the Investment Association recently announced their post-RDR methodology for nominating primary share classes. Where multiple share classes of a fund exist, the intention is to take the unbundled share class that has the highest charge but that’s free of any rebates or intermediary commission. The share class must also be freely available through retail third-party distributors.

At the end of 2012 many RDR share classes were launched, which makes it impossible to compare performance prior to the launch date unless synthetic performance history is added. The Investment Association has said that post-RDR share classes are to take the track record of pre-RDR bundled retail share classes.

The orange parts in the infographic show the areas we at Defaqto currently rate as part of our independent Star and Diamond Ratings. Given what we’ve just said about outsourcing, it probably won’t surprise you that it’s the multi-asset (and discretionary) areas we cover at the moment rather than single-asset and specialist.

Investment styles

Within the multi-asset space, we’ve identified two different styles: risk-targeted and return-focused.

Risk-targeted funds operate within strict risk bands, typically ranges of volatility, while return-focused funds aim to achieve outperformance, either absolute or relative to a peer group or benchmark – and typically with some risk control. Risk-targeted funds exist as families, with the same team and process behind each fund in the family.

Some of the individual funds within return-focused can also be viewed together as risk-focused families. These families are defined by having a similar management team and process, in some cases even the same team and process. They are set up to follow indirect rather than direct risk targets.

Some of the risk-targeted and risk-focused fund ranges are also unitised discretionary fund families – unitised discretionary fund management or unitised DFM.

Discretionary fund management or DFM (with the exception of unitised DFM) tends to be delivered to the client in two forms.

Firstly, there is the client-specific solution (usually known as bespoke DFM) which can provide a more individual service and investment approach designed for the individual client. This service also tends to focus more on the service aspects, for example including more detailed, perhaps on a face-to-face basis with an investment manager. Charges and minimum investments tend to be significantly higher.

Perhaps more familiar to the adviser is the second type of DFM, known as managed portfolio services. In this case, discretionary managers construct a series of portfolios that they believe will appeal to significant client segments and manage the portfolios according to their own mandates. It is up to the adviser to recommend the more suitable portfolio for the clients’ needs and risk appetite.

Similar to fund structures, all clients in a managed portfolio service solution will have the same portfolio. It is an off-the-shelf solution, so in theory, charges should be lower than for bespoke portfolios. Minimum investments could be as low as £20,000.

Advisers need to keep costs to the client in mind, though. These managed portfolio services portfolios are segregated, which means transactions are subject to potential capital gains tax, and the majority of portfolios are made up of collective investment schemes, so there could be additional charges.

To provide advisers with more resources to help them stay on top of the multi-asset universe, Defaqto has teamed up with the Institute of Financial Planning (IFP). The first document we have produced together, the multi-asset funds factsheet, can now be downloaded here. Rather than being an academic discussion of the universe, these factsheets provide advisers with a practical guide to each type of solution.

Maintaining an up-to-date list of suitable funds

Once suitable funds have been selected, the job is far from done for the adviser. They need to ensure that the solutions they originally selected remain roughly the same over time; the proposition needs to continue to match the original client mandate. If any of the solutions change and the adviser needs to make adjustments, they should already have other solutions ready and researched so that they can offer them in the original solutions’ place.

It’s also important to remember that it’s not just the solutions that can change. Client requirements can evolve as clients get older, their circumstances change or they may have a different attitude to risk or capacity for loss. Advisers should check on an ongoing basis whether changes on the client side need to be reflected in the investment portfolio.


Value of IT outsourcing deals in the UK up 15%

February 16th, 2015 by Rahul Jain No comments »

The total value of IT outsourcing contracts agreed in the UK last year rose 15% on 2013 figures, according to new research.Outsourcing70

IT outsourcing (ITO) contracts agreed in 2014 totalled £3.44 billion in value, with nearly a third of that value accounted for by deals struck in the energy and utilities sector.

Those deals were worth £1.05bn and accounted for most of the 187% year-on-year rise in the sector on £373 million spent on all outsourcing deals in the sector in 2013.
The figures were revealed by BPO provider arvato in its UK Outsourcing Index for 2014. The data was based on information complied by outsourcing analysts NelsonHall.

According to the report, the UK’s outsourcing market was worth £6.65bn in 2014, with £3.1bn of contracts agreed business process outsourcing (BPO) deals. Contracts worth £109 million were agreed representing a mix of ITO and BPO arrangements.

“The most in-demand ITO services were multi-scope infrastructure management, with £899 million of spend, application management, worth a combined £772 million and network management contracts totalling £485 million,” arvato said.

The report revealed that public sector outsourcing contracts agreed in the UK last year had a total value of £2.49bn and that just 8% of all outsourcing deals in the public and private sectors signed by UK-based organisations in 2014 “involved work being delivered entirely offshore”.

Debra Maxwell, managing director of arvato UK, said: “Outsourcing has mistakenly become synonymous with offshoring, yet our research demonstrates that UK delivery is continuing to play a fundamental role in the industry as customer requirements become more sophisticated.”

“Offshoring will always have a role to play in meeting certain business’ needs but the demand for more sophisticated solutions, combined with salary inflation in traditional offshore locations, means UK-based delivery is set to continue to dominate,” she said.

The report also highlighted changes in the way that customer relationship management functions are being delivered by organisations. More than 60% of third parties delivering these services now provide “multi-channel” services, up from 40% in 2013.

NelsonHall said. “Whereas relatively recently contact centre outsourcing contracts in the UK were typically for voice only services, in 2014 it was the norm for customer management services contracts to be multi-channel in nature, with email, web chat, and even social media support commonplace. This was true across both the private and public sectors, with the e-government initiative ensuring that all local government customer services contracts announced were widely multi-channel in nature.”

In the financial services sector there was a rise in the number of outsourcing contracts entered into for platform-based services. In 2013, a quarter of all UK outsourcing contracts in the sector were for platform-based services, but this rose to 40% last year, according to the report. New outsourcing deals agreed in the sector in 2014 had a total value of £1.1bn, making it “the most active private sector”, it said.


Skill shortage seen a risk for Indian IT sector growth

February 11th, 2015 by Rahul Jain No comments »

A shortage of qualified engineers to tap high-end business opportunities such as mobile applications and cloud computing poses a risk to the growth prospects of India’s showpiece IT outsourcing sector in the years ahead, a leading lobby group said.Outsourcing69

The National Association of Software and Service Companies (Nasscom) also said on Tuesday India’s nearly $150 billion IT services outsourcing sector is expected to see export revenue growing 12-14 percent in the financial year starting in April.

That compares with an estimated increase of about 12 percent in the fiscal year ending on March 31, it said. Nasscom’s export forecasts for the next fiscal year set the benchmark for the top companies and are closely tracked by market analysts.

Future growth in the sector will be fueled by growing demand of global corporations for new services such as digital technology, mobile applications and cloud computing, said officials at Nasscom.

But the export-driven outsourcing industry needs to focus on building a large pool of skilled workforce to tap opportunities in the emerging high-end services segment, said R. Chandrasekaran, chairman of Nasscom.

India’s top IT outsourcing service providers, including Tata Consultancy Services Ltd and Infosys Ltd, have thrived by offering infrastructure management and application development services to U.S. and European clients.

Faced with increased competition and pressure on prices for routine services, the companies are now looking to move up the value chain and boost growth by tapping high-margin businesses including artificial intelligence and automation.

“We have to look inwards as an industry and see how can we re-skill ourselves to tap some of those opportunities,” Chandrasekaran told reporters. “Skill set mismatch has to be mitigated by the industry.”

The outsourcing sector, which makes as much as three-quarters of its sales from the United States and Europe, employs roughly 3.5 million people, the bulk of them in India, and accounts for 9.5 percent of the country’s gross domestic product, the lobby group said.

The sector’s exports in the fiscal year 2015/16 are forecast to rise to as much as $112 billion, according to Nasscom. The sector is worth about $150 billion after adding the revenue generated from the domestic market.


How an Outsourcing Contract Can Boost IT Service Provider Performance

February 11th, 2015 by Rahul Jain No comments »

IT Outsourcing customers look to service providers to cut costs and improve efficiency, in addition there is the increasing expectation for providers to also deliver business results. Here are some secrets to using your outsourcing contract to set goals and reinforce service levels to link supplier profitability to business objectives.Outsourcing67

IT outsourcing customers are increasingly looking for their service providers not just to cut technology costs or improve process efficiency, but to deliver business results. But getting that kind of business value from IT suppliers has proven to be a challenge.

The secret getting technology providers on board with delivering innovation may actually be the terms of the IT outsourcing deals. “Most IT services buyers seek compliance, not improved supplier performance” from their contracts, says Brad Peterson, partner in the Chicago office of law firm Mayer Brown. “That’s all that’s necessary for most it services categories. However, IT buyers can create substantially more value by using incentives to deliver innovation, analytics, data security, mobility, cloud and other fast-changing it services categories.”

We talked to Peterson and Linda Rhodes, partner Mayer Brown’s Washington, D.C. office about what terms can align suppliers with business goals and how to set and enforce service levels that will link supplier profitability to business objectives.

Do most it services buyers use contract terms to improve supplier performance? If not, why not?

Linda Rhodes, partner, Mayer Brown: Many IT services customers use the contract in one or more ways to improve supplier performance, but customers often do not see the full potential of the contract to drive exceptional performance.

Using the contract to drive exceptional performance takes some work on the part of the customer. It is critical that the customer team negotiating the contract really understand the needs of the customer’s business and consider building in multiple incentives—both negative and positive—including the innovative approaches to gain sharing.

Further, the customer team enforcing the contract needs to fully understand and exercise the rights the customer has under the contract and consistently hold the supplier accountable.

Do IT service buyers tend to focus more on disincentives than incentives—to the detriment of the performance of their IT outsourcing arrangements?

Brad Peterson, partner, Mayer Brown:  The focus on disincentives is natural. Disincentives help to motivate suppliers to fully comply instead of merely avoid material breach—which is important in all contracts.

Incentives motivate performance beyond compliance, which only delivers value in some contracts.   Also, suppliers already have substantial positive incentives outside of the contract, including the chance for referrals and additional awards.

Rhodes:  The disincentives are often straightforward and familiar to the customer—for example, a service-level credit for service level defaults, holdbacks until payment milestones are met. It takes some thinking beyond the standard contract terms to create true positive incentives for the supplier.

What sorts of incentives can be embedded into outsourcing contracts to drive better supplier performance?

Rhodes: There are numerous positive and negative incentives that can be used, including the following:

Ensuring that you have strong general terms in your contract.[Make sure] obligations are clear [around] rights to withhold payment, supplier reporting requirements, audit rights, governance resources. Enforce these rights by holding the supplier accountable through firm correspondence, requiring corrections, withholding payments and collecting credits when available. Require the supplier to indemnify, so legal costs are covered. Exclude certain damages from limitations of liability
Creating service levels to drive the supplier to meet ongoing service expectations. Use credits to focus on critical business needs and retain flexibility to change, add, modify, and reallocate credits to drive supplier’s focus.

Building in incentives for projects. Include negative incentives, such as holdbacks and credit, and positive incentives, such as early completion bonuses and gainsharing.

Peterson: You can embed incentives into contract terms by aligning compensation to outcomes and by having exit or other rights triggered by contract events. For best results, start by deciding what business outcomes you want to drive.  Then, check whether your provider’s [goals] are aligned with yours by a standard contract structure.

IT Outsourcing customers look to service providers to cut costs and improve efficiency, in addition there is the increasing expectation for providers to also deliver business results. Here are some secrets to using your outsourcing contract to set goals and reinforce service levels to link supplier profitability to business objectives.

If not, add new compensation terms such as performance credits to correct that misalignment.  For example, if a fixed price would allow the provider to increase profit by cutting quality, add a quality metric tied to compensation. A critical best practice is to very carefully draft incentive provisions to avoid gaming and unintended consequences.

How can liability provisions and termination rights be used to drive better performance?

Rhodes: These are complex areas.  While there are usually limitations of liability in outsourcing contracts, it is at least as—if not more—important to consider what supplier actions should be outside of the limitations on liability as it is to agree on the limitations themselves.  The consequences to the supplier of breaches which are outside of the limitations on liability will be much more powerful in driving supplier behavior.

Termination is not an easy mechanism for a customer to use for many reasons.  The customer should be sure to build a strong case for termination, which [can be used] as leverage to drive supplier behavior.

Peterson:  If you are using the liability and termination provisions, first put the provider on notice about the breach with firm correspondence and what you ask as a cure. Follow up with subsequent correspondence. By creating a timely written record of your concerns, you show the provider that you are ready to use the liability and termination clauses. The provider thus has good reason to improve performance before you take action under the contract.

How are these various contract terms most effectively enforced if the goal is to improve supplier performance?

Peterson: Another critical best practice is to be ready, willing, and able to give effect to the incentive provision. To be ready, willing and able, you need the tools and data to accurately assess performance; the governance team to review, audit and determine the results; and the management support for following through. You reduce the power of the incentive if you’re willing to be talked out of taking a credit upon a failure or into paying a bonus without a success.

We recommend enforcing these terms consistently with clear correspondence.  Treat them as a result of supplier performance, not a punishment or negotiation.

Rhodes: Be diligent. Understand your rights, exercise those rights, hold the supplier accountable, and follow through, follow through, follow through.


IBM signs nine year IT outsourcing deal with Birla Sun Life Insurance

February 9th, 2015 by Rahul Jain No comments »

IBM has announced that Birla Sun Life Insurance (BSLI), the life insurance arm of the Aditya Birla Financial Services Group, signed a nine year IT outsourcing deal with IBM to consolidate, redesign in-scope applications and use analytics to provide client insights that build competitive advantage. BSLI will leverage mobility and cloud solutions developed by IBM Research and the IBM India Software Lab to achieve increased revenues, reduce costs and enhanced profitability.Outsourcing66

BSLI in this partnership with IBM will adopt a first-of-a-kind technology solution to the insurance sector that will radically transform the business technology model. BSLI will leverage IBM’s business consulting, application development and maintenance services to drive process efficiencies and transform the business towards better outcomes for customers and employees. Tailor-made solutions from IBM will bring process maturity best practices, IT portfolio consolidation and introduce innovative tools.

This deal could help BSLI realize a cost reduction advantage from consolidation of IT vendors. IBM’s flexible pricing model will enable dynamic ramp up/down and consumption based operational spending along with a roadmap to modernize, consolidate and rationalize the application portfolio, bringing in speed and reduced time to market.

Speaking on the occasion, Mayank Bathwal, Dy. CEO, Birla Sun Life Insurance said, “We at Birla Sun Life Insurance are committed to offering an enhanced experience to our customers while improving on efficiencies and profitability of the business. We believe that this winning partnership with IBM will help us excel and stay ahead of the curve in this fast evolving life insurance industry, while addressing all business needs. IBM’s vast experience and technology capabilities will add tremendous value to our business.”

“IBM remains committed in the transformation of the BFSI industry catalyzing growth and inclusion. We are pleased to partner with BSLI to help leverage leading technology solutions like cloud and analytics to make critical strides in achieving business transformation, improving service delivery and increasing customer satisfaction,”said Vanitha Narayanan, Managing Director, IBM India. “We will bring our local and global expertise and capabilities to fuel BSLI’ expansion and growth in this dynamic Insurance industry in India.” she further added.


Infosys to provide outsourcing services to Dutch insurance company

February 9th, 2015 by Rahul Jain No comments »

Infosys BPO today said it has secured an IT services deal with Dutch insurance services firm a.s.r. for supporting back-office operations.Outsourcing5

The BPO services arm of the Bangalore-based firm, Infosys BPO, will supply back-office services for the a.s.r. labelled pensions administration system from April 1, 2015, Infosys said in a statement.

Eighty seven employees of a.s.r. will be transferred to Infosys BPO. The contract was signed at the end of January by a.s.r. CEO Jos Baeten and from Infosys BPO CEO and Managing Director Anup Uppadhayay, it added.

a.s.r. also offers a wide range of financial products covering non-life, life and income protection insurance, group and individual pensions, health insurance and travel & leisure and funeral insurance. It also invests in developing and operating real estate.

“To support our vision on continuous improvement of our client services and to be more cost effective, we have selected Infosys BPO to run our pensions back-office administration,” Baeten said.

Uppadhayay said Organisations like a.s.r. need to be focused on their core business and are therefore looking to partner with experts like Infosys BPO to streamline their operations and enable seamless running of business processes.


Protected by تهنئة
Get Adobe Flash player