Capital markets industry grappled with high regulatory pressures, intense competition, and uncertain economy. Market participants adopted disruptive business models to contain cost and improve profitability. As the financial services industry is undergoing a technology revolution with the advent of digital technologies, capital markets players have invested in next-generation technologies to stay ahead of competition. Buy-side and sell-side participants, as well as the financial intermediaries invested in risk & compliance management solutions, automation, cloud & open source technologies, mobility, high-end analytics, and third-party platforms as they focused on cost reduction, standardization, and portfolio rationalization.

As capital markets industry is witnessing a number of changes, IT service providers are looking at leveraging the opportunity by tailoring their offerings with next-generation technologies, providing commoditized services, collaborating with the buyers to invest in innovation, and forming alliances with leading platform providers.

In this research, we analyze the current trends and the future outlook for large, multi-year application outsourcing relationships for the global capital markets sector. We focus on:

• Trends in AO in the BFSI segment
• Market trends and activity for large AO relationships in capital markets
• Emerging priorities for buyers and key investment themes in capital markets AO
• Future outlook for 2015-16

The research also captures key movements in volumes/values of capital markets AO transactions, evolving trends, market dynamics, and emerging priorities of buyers in the last 12 months.

Scope of the analysis

• Industry: Capital markets (investment banking, asset management custody and funds administration, and brokerage services); excludes retail and commercial banking, insurance (life, annuity, pensions, and P&C), and healthcare payers
• Services: Large (TCV > US$25 million), multi-year (>three years), and annuity-based application outsourcing
• Geography: Global
• Sourcing model: Third-party AO transactions; excludes shared services or Global In-house Centers (GICs)

CONTENT

This report is structured across three key sections, each containing insights on application outsourcing in the BFSI and capital markets sector, with a specific focus on large-sized contracts:

• BFSI ITO market overview: Analysis of the overall BFSI IT Outsourcing (ITO) market and transaction trends:
• Market size and growth
• Adoption drivers
• Transaction characteristics (e.g., transaction volumes, value, frequency, and scope)
• Market activity and adoption trends (e.g., by geography, subverticals, and functions)
• Capital markets AO overview: Analysis specific to the capital markets AO industry with a focus on large transactions:
• Transaction activity and growth trends
• Demand characteristics for capital markets AO services by:
• Geography
• Line of business: Capital markets (asset management, investment banking, custody and fund administration, and brokerage)
• AO subfunctions
• Buyer size
• Offshore leverage
• Global delivery locations
• Renewal activity
• Emerging priorities of buyers and key investment themes in capital markets AO:
• Market dynamics and emerging priorities across the capital markets ecosystem
• Key investment themes
• Outlook for 2015-16

Some of the findings in this report are:

• The BFSI IT market overview:
• The global BFSI ITO market size is estimated to have reached US$110-130 billion in 2014
• The BFSI ITO industry witnessed a decline of 5% in the number of transactions signed and 43% in total value of outsourcing contracts
• Europe, Middle East, and Africa (EMEA) and North America remained the largest source geographies, together constituting 80% of the total BFSI ITO deals in 2014
• Capital markets AO overview:
• The overall number of AO deals increased by 10% in 2014, as compared to the previous year, while the number of large AO deals declined significantly (58%) as the buyers cut their IT spending
• Total TCV of new large AO contracts in 2014 declined by 28%. However the decline in TCV was less pronounced as compared to the deal count decline, as enterprises chose to sign longer deals, with similar ACV value
• Consulting and systems integration witnessed increased demand because buyers looked for cost-optimization, application portfolio rationalization, and platform consolidation
• More than 75 large AO capital markets deals with total TCV of ~ US$8.3 billion will be coming up for renewal in the next five years
• Key investment themes of 2014 were in the areas of utility services, automation, mobility, big data analytics, cloud & open source technologies, platform modernization, and advanced risk & compliance solutions