Topic: Everest Group s PEAK Matrix TM for Capital Markets AO Service Providers

Transcription

1 Topic: Everest Group s PEAK Matrix TM for Capital Markets AO Service Providers Focus on TCS December 2014 Copyright 2014 Everest Global, Inc. This document has been licensed for exclusive use and distribution by TCS

2 Background and scope of the research Background of the research Strained revenue growth, burgeoning costs due to litigations, and regulatory compliance continued to adversely affect the profitability of capital markets firms in This forced them to rethink and reinvent their business models as well as technological priorities. As a result, 2013 saw strong return of discretionary spend led by investments in development of specific applications and platform-based utilities for regulatory compliance, data management, risk management, and digital initiatives (cloud, analytics, and mobility) Consequently, the service provider competitive landscape is also intensifying, as service providers continue to ramp up their capabilities, invest in innovative technologies, form alliances, and acquire strategic targets to address the growing and complex technology needs of capital markets Everest Group has assessed the capability of 23 AO service providers specific to the global capital markets sector and has mapped them on Everest Group 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. Additionally, Everest Group has also profiled the capabilities of these 23 service providers in detail including a comprehensive picture of their service suite, scale of operations, domain investments, delivery locations, and buyer satisfaction specific to capital markets AO services This document focuses on TCS capital markets AO experience and includes: Overview of the capital markets AO service provider landscape Everest Group s assessment of TCS delivery capability and market success on PEAK matrix Detailed capital markets AO profile for TCS 2

3 This Everest Group report examines the service provider landscape for large annuity contracts in the capital markets AO Banking Retail financial services (B2C 1 ) Retail banking Lending Cards Commercial banking (B2B 2 ) Capital markets Investment banking Asset management Custody and funds administration Brokerage Others 3 BFSI Insurance Life and pensions Property and casualty Others NOT EXHAUSTIVE Focus of report Services industry IT Infrastructure Outsourcing (IO) IT Application Outsourcing (AO) Business Process Outsourcing (BPO) Consulting Traditional IO Remote Infrastructure Management (RIM) Infrastructure Management Services (IMS) Cloud Applications development Applications maintenance Independent testing Package implementation ERP services Business intelligence / data warehousing BFSI-specific BPO HRO FAO PO Contact center Knowledge services IT strategy / operations consulting Business consulting Infrastructure consulting Infrastructure rollouts This report analyzes IT applications outsourcing in the capital markets subvertical with a focus on large (TCV > US$25 million), annuitybased, multi-year (over three years) relationships 1 Business-to-consumer relationships 2 Business-to-business relationships 3 Includes other capital markets functions such as structured finance, treasury, FX, and horizontal functions including risk management 3

4 From a landscape of 50+ service providers, Everest Group assessed 23 providers for their capabilities in capital markets AO Service provider outreach (partial list) Service providers assessed Criteria for inclusion in the assessment Success in large capital markets AO relationships, i.e., Over US$25 million TCV Over three-year relationship duration Active as of December 31, 2013 Everest Group experience and RFI response 1 Assessment based on: RFIs submitted by service providers 1 Everest Group Transactions Intelligence database Service provider disclosures and interviews Everest Group s interaction with capital markets buyers 1 Assessment for Accenture, Capgemini, CSC, and IBM excludes service provider inputs, and is based on Everest Group s proprietary Transaction Intelligence (TI) Database, service provider public disclosures, and Everest Group s interactions with capital markets buyers Note: We continuously monitor market developments and track additional service providers beyond those included in the analysis Confidentiality: Everest Group takes its confidentiality pledge very seriously. Any information, that is contract-specific, will be presented back to the industry only in an aggregated fashion 4

5 Market success The service providers assessed in this study can be classified into four distinct categories Global majors Offshore majors Regional players Tier-2 Indian providers PEAK Matrix assessment dimensions Everest Group PEAK Matrix Major Contenders Leaders 6 Emerging Players Delivery capability Scale Scope Domain investments Delivery footprint 5 Buyer satisfaction These service providers cumulatively represent over 85% of the global large-sized capital markets AO transactions 1 1 Contracts that have a TCV of more than US$25 million and are active as of December 2013 Source: Everest Group (2014) 5

6 Market success 25 th percentile 75 th percentile TCS is positioned as a Leader and Star Performer on Everest Group PEAK Matrix for capital markets AO Everest Group Performance Experience Ability Knowledge (PEAK) Matrix for large capital markets AO relationships 1 75 th percentile High Leaders TCS Cognizant Major Contenders Infosys IBM Wipro Accenture HCL Leaders Major Contenders Emerging Players Star Performers Luxoft CSC CGI L&T Infotech EPAM Capgemini Hexaware MphasiS NIIT Tech Tech Mahindra IGATE Dell Services Genpact Polaris Syntel Virtusa Low Low Emerging Players 25 th percentile High Capital markets AO delivery capability (Scale, scope, domain investments, delivery footprint, and buyer satisfaction) 1 PEAK Matrix specific to large (>US$25 million TCV), multi-year (>3 years) application outsourcing relationships for the capital markets sector (investment banking, asset management, custody, fund administration, and brokerage); excludes banking and insurance Note: Assessment for Accenture, Capgemini, CSC, and IBM excludes service provider inputs and is based on Everest Group s proprietary Transaction Intelligence (TI) Database, service provider public disclosures, and Everest Group s interactions with capital markets buyers Source: Everest Group (2014) 6

7 TCS Capital markets ITO profile (page 1 of 14) Corporate and BFSI overview Company description: Tata Consultancy Services (TCS) offers a range of IT and consultancy services across various industries. TCS customers in the BFSI vertical include global universal banks, regional/local banks, market infrastructure providers, insurance companies, and investment banks. TCS provides solutions to meet their needs in multiple areas such as digital banking, governance, risk management, compliance, and analytics Headquarters: Mumbai, India Website: Geographical mix Service mix 2014; US$ million 2014; US$ million 100% = 13, % = 13,442 Latin America (2.30%) India 6.7% Other APAC 7.2% Continental 11.2% Europe 17.5% UK MEA (2.10%) 53.0% North America Engineering & Global industrial services (4.7%) Assurance services 8.4% Infra. 11.9% 41.6% services 12.0% BPO 15.5% consulting (3.4%) Enterprise solutions including BI Asset leverage solutions (2.5%) ADM Scale of BFSI subverticals Key financial parameters Revenue in US$ million 1 FY ends on March 31; total may have minor variation owing to rounding-off adjustments 2 Major BFSI client mentioned here are based on information collected by Everest Group from public sources Source: Everest Group (2014) >US$500 million US$ million <US$100 million Banking Capital markets Insurance 27.6% 10, % 4,384 4,986 Revenue 1 from the BFSI vertical Revenue 1 from other verticals Operating margin 29.1% 11,568 13,442 5,767 5,787 6,582 7,675 FY 2012 FY 2013 FY 2014 Services offered for the BFSI vertical: IT application development, maintenance, infrastructure, reengineering, BPO, consulting and assurance services, and TCS BaNCS (including capital markets, banking, and insurance). Services span the entire capital market value chain Major BFSI clients 2 : ABN AMRO, BNP Paribas, Citigroup, CBA, Deutsche Bank, ING, Rabobank, RBS, Bank of America, SBI, American Express, Lloyds, and JPMC 7

8 Market success 25 th percentile 75 th percentile TCS Capital markets ITO profile (page 2 of 14) Capital markets AO capability assessment and market success Headline assessment TCS maintains its Leader and Star Performer positioning for a third consecutive year on account of its strong market success and continued domain investments. It has added new large deals and scaled up to >25,000 FTEs in capital markets AO services space Everest Group PEAK Matrix for Capital Markets AO 75 th percentile High Leaders TCS Major Contenders PEAK Matrix dimensions assessment Dimension Rating Remarks Market success Scale High Low Significant success in capital markets with ~40 large active AO deals out of which ~10 were new Average TCV of large transactions is ~US$170 million Major capital markets AO clients 2 : Keler Ltd., DNB, Strate, Cussco, JPMC, Citi, DB, BofA Derives ~45% revenue from the BFSI vertical (amounting to > US$5.8 billion in FY 2013) Average deal duration is six years for large CM AO deals Emerging Players Low Low 25 th percentile High Capital markets AO delivery capability (Scale, scope, domain investments, delivery footprint, and buyer satisfaction) Success dashboard 1 Capital markets lines of business I-banking Asset mgmt. Market share Brokerage Custody, fund admn By active ACV By cumulative TCV By number of contracts 17% 36% 26% High Medium Low Geographic scope North America Latin America EMEA APAC Scope Domain investments Delivery footprint Buyer satisfaction 1 Transaction success for large-sized deals; assessment relative across service providers 2 Based on information from company disclosures / public sources Source: Everest Group (2014) Strong focus on asset management, brokerage and investment banking subverticals Provides services for all AO subfunctions: ADM, SI, ERP, and testing; other services include BI and DW Launched a number of solutions for capital markets clients in 2013, including, Aggregated Investment Exposure Monitoring, Smart REACH to maximize Portfolio performance, Investment performance and Reporting, Social Media offering for wealth management firms, among others Global delivery centres for AO spans ~10 countries High offshore bench strength of FTEs Solid delivery and front-end sales teams, reliable and sincere account management, and ability to invest in the relationship were key areas of strengths cited by clients 8

9 TCS Capital markets ITO profile (page 3 of 14) AO domain investments Proprietary solutions (representative list) Line of business Solutions Overall BFSI TCS BaNCS Universal Financial Platform: Suite of BFSI business applications including loan origination securities processing, corporate actions, life, P&C, workers compensation, agent workbench, core banking, payments, treasury, compliance, mobile banking, global risk management, market infrastructure, and channel services Data management tools: Tools for data cleansing (DataClean), data generation (DataXplod), data masking, and data migration Reporting tools: Tools for XBRL-based reports (Exegenix), Flex-based reporting solution for Force.com data, and regulatory reporting Other tools such as Assent (standards checker tool), Consult (knowledge management tool), empower (entity relationship diagramming tool), and Operations Platform for Reconciliation Frameworks such as Asset Liability Framework (modeling framework for liquidity gap) and Internet Banking Evaluation Framework CAF (Customer Analytics Framework): Pega-/Chordiant-based solution framework for lead management and campaign management DemoBank: A model SharePoint site with custom features built into a SharePoint portal (launched in 2012) Reference architecture and component models for switch platform and payments hub Capital markets Aggregated Investment Exposure Monitoring: Capital Markets solution for real time aggregated investment exposure monitoring across the entire investment chain Smart REACH: It is a research and advisory channel for financial advisor s in capital markets industry to maximize portforlio performance Investment Performance and Reporting: Provides performance reporting & analysis for funds and investors Social Media offering for wealth management firms: It enables financial advisor s to leverage social network as an alternate channel for communication Liferay Portal POC: Portal for leading stock exchange Source: Everest Group (2014) 9

10 TCS Capital markets ITO profile (page 4 of 14) AO domain investments Proprietary solutions (representative list) Line of business Solutions Capital markets Reference architecture repository for Asset Management, Wealth Management, and Broker-Dealer. These incorporate industry best practices in transformation, modernization, and application rationalization Custody architecture repository: Reference architecture for Asset Management Business incorporating the industry best practices. This is used for transformation, modernization and application rationalization engagements Forex architecture repository: Reference architecture for Asset Management Business incorporating the industry best practices. This is used for transformation, modernization and application rationalization engagements Commodities architecture repository: Reference architecture for Asset Management Business incorporating the industry best practices. This is used for transformation, modernization and application rationalization engagements Market-Infrastructure architecture repository: Reference architecture for Asset Management Business incorporating the industry best practices. This is used for transformation, modernization and application rationalization engagements Transfer Agency architecture repository: Reference architecture for Asset Management Business incorporating the industry best practices. This is used for transformation, modernization and application rationalization engagements Institutional Brokerage architecture repository: Reference architecture for Asset Management Business incorporating the industry best practices. This is used for transformation, modernization and application rationalization engagements High Performance computing (HPC) for Capital markets (In progress) T2S Offering for CCPs, CSDs and Custodians Mobile Security and FPGA (Field programmable gate array) with Juniper Source: Everest Group (2014) 10

11 TCS Capital markets ITO profile (page 5 of 14) AO domain investments Proprietary solutions (representative list) Line of business Solutions Capital markets Market Surveillance Framework leveraging Digital Technologies Settlement Utility / Offering B2B Portal and Open AM integration: Integrated Open AM with Liferay for authentication of user on various devices like Tablet and Laptop Customised jbpm: Meta Rules designer solution on top of the jbpm engine using GWT Source: Everest Group (2014) 11

12 TCS Capital markets ITO profile (page 6 of 14) AO domain investments Proprietary solutions (representative list) Line of business Solutions Capital markets T2S Integrated offering launched in 2012 TCS T2S enabler framework: Framework for impact assessment on market players and transition and strategy for T2S adaptation T2S implementation impact analysis tool kit: Impact assessment on market players and transition; launched in 2012 T2S implementation assurance tool kit: Assurance test cases specific to T2S components functional evaluation TCS BaNCS T2S adapter: The special adapter component to TCS BaNCS components to adapt changes required for T2S EMIR Integrated Offering: Integrated offering from plan to implementation phase covering European Market Infrastructure Regulation (EMIR); launched in 2012 HPC Offerings: High Performance Computing (HPC) solutions from advisory to managed services; launched in 2012 MDM Solutions: Master Data Management (MDM)-based solution for wealth management firms to provide a consolidated view of the customer across the firm; launched in 2012 PoC Wealth Management Financial Advisor: This is a Proof of Concept (PoC) solution for key financial advisory services in wealth management; launched in 2012 Reconciliations Utility: Offering to set up or assess reconciliation utility within the firm; launched in 2012 Dodd Frank Act Impact Assessment framework: Impact assessment framework covering business models, trading systems, risk management, clearing, and record keeping / reporting; launched in 2011 TCS derivatives regulatory compliance framework: Set of solutions and best practices that enable buy-side and sell-side firms pursue compliance of various OTC derivatives regulations; launched in 2011 TCS MIFID regulatory compliance enabler framework: Solution helps capital markets firms in their adaptation to and compliance with the directives/regulations prescribed by MiFID II; launched in 2011 Source: Everest Group (2014) 12

13 TCS Capital markets ITO profile (page 7 of 14) AO domain investments Proprietary solutions (representative list) Line of business Solutions Capital markets Risk management offerings covering enterprise risk management and BASEL Assurance services with specific offerings for third-party products like Calypso, Murex, etc. and reusable collection of test scenarios HARMONY across various capital markets functions Emerging technology-based offerings mobility, big data, social media, and connected marketing (digital marketing) TCS proprietary universal banking platform TCS BaNCS has capital markets-related modules including: Wealth Management: End-to-end solution covering the wealth management value chain from client onboarding to portfolio management Treasury: Mid- and back-office solution providing risk analytics and decision support functions for banks, central banks, and other financial institutions Securities Trading: Multi-asset and multi-market trading solution for integration between front- and backoffices, and real-time risk management Securities Processing / Custody: Provides a range of securities processing functions, from trade execution through confirmation, settlement, and accounting Corporate Actions SWIFT Ready 2013 certified solution that automates end-to-end corporate actions and income processing Market Infrastructure helps address Straight-Through-Processing (STP) across trading, clearing and settlement, risk, and collateral management value chain. It includes trading, CCP clearing, OTC services, depository services, registrars, and transfer agents services, etc. Source: Everest Group (2014) 13

14 TCS Capital markets ITO profile (page 8 of 14) AO domain investments Acquisitions (representative list) Target Date Capabilities added Alti France 2014 Enhanced TCS s capabilities for SAP solutions across industries such as banking, financial services, luxury, manufacturing, and utilities Computational Research Laboratory (CRL) (India) Citigroup Global Services Limited TKS-Teknosoft (Switzerland) Key alliances (representative list) Alliance partner Juniper EMC Isilon (Several) Mobility 2012 Expanded capability for high performance computing 2008 Enhanced ability to offer an end-to-end, domain-led third-party solution for business operations to TCS large financial services clients. The acquisition will also enable TCS to create platforms for the future and integrate TCS strong domain expertise in operations along with TCS suite of products for the financial services sector 2006 Expansion of TCS portfolio of products for the banking and financial services market Purpose of alliance Partnership for joint solutioning Alliance for analytics, big data and information management More than 40 global system integration partnerships. Few of them are: IBM, Cloudera, Hortonworks, MapR, SAP, Teradata, DataStax, Informatica, TIBCO, Talend, Microstrategy, Pentaho, Qlikview, Tableau, SAS, and Splunk Several alliances in the mobility domain with Boxtone, BlinkMobile, Ymedia Labs, and Perfecto Source: Everest Group (2014) 14

15 TCS Capital markets ITO profile (page 9 of 14) AO domain investments Key alliances (representative list) Alliance partner Neospeech Apple Google, Motorola Blackberry Microsoft, Nokia, Moovweb, Rhomobile, and Apigee Appcelerator IBM (Several) ThunderHead SmartStream Savvis (Several) Source: Everest Group (2014) Purpose of alliance Alliance for text to speech conversion Alliance for solution development support, training, and certification Alliance for solution development support, partner support, early access to device, and partner industryspecific solution Development, deployment post installation support, training, and access to pre-launch devices from RIM engineers Alliance for solution development support, partner support, and joint GTM strategy Strategic Global integration partner for Appcelerator Strategic Global integration partner for IBM s Mobile Foundation platform Jamo, Testplant, Keynote, Perfecto Mobile, SmartBear, Test Quest Pro, Experitest, Zap-fix, Neotys, Sharepoint, Apache Cordova, and Good Dynamics Product implementation partnership Implementation partnership for SmartStream s trade reconciliation products Partnership to host TCS BaNCS suite of products on Savvis enterprise-class infrastructure on a cloudenabled hosted environment General enterprise-level alliances with vendors such as SOFGEN Global alliance for TCS BaNCS solutions, Cisco, EMC, HP, IBM, Microsoft, Oracle, Sun, and SAP for solutions across BFSI and other industry verticals 15

16 TCS Capital markets ITO profile (page 10 of 14) Capital markets ITO transactions activity NOT EXHAUSTIVE Recent transaction activity 1 Buyer s name Announcement date TCV estimate (US$ million) Duration (years) AO/IO/ Both Contract details and services Unknown client January 2014 N/A N/A AO TCS developed a tablet application for a European payments provider to simplify sales process for its field force MyState Limited December 2013 N/A N/A AO Implementation of TCS BaNCS core banking solution CUA December 2013 N/A N/A AO Implementation of TCS BaNCS core banking solution Keler November 2013 N/A N/A AO Implementation of TCS BaNCS Market Infrastructure Solution 1 Publicly-announced capital markets ITO transactions during 2010 to 2014 Source: Everest Group (2014), Transaction Intelligence Database 16

17 TCS Capital markets ITO profile (page 11 of 14) Capital markets ITO transactions activity NOT EXHAUSTIVE Recent transaction activity 1 Buyer s name Announcement date TCV estimate (US$ million) Duration (years) AO/IO/ Both Contract details and services Unknown Client October 2013 N/A N/A AO Assurance services to certify the roll out of clients applications globally Unknown client July 2013 N/A N/A AO Managed services engagement for cards platform Unknown client July 2013 N/A N/A AO application development, maintenance and assurance of core banking and enterprise systems Unknown client January 2013 N/A N/A AO Sole provider entrusted with client s entire application portfolio. TCS Global Network Delivery Model will be leveraged to deliver services seamlessly from centers in Mexico, China, Philippines, and India Unknown client January 2013 N/A N/A AO Strategic partner for maintaining, supporting and upgrading client s core systems and infrastructure 1 Publicly-announced capital markets ITO transactions during 2010 to 2014 Source: Everest Group (2014), Transaction Intelligence Database 17

18 TCS Capital markets ITO profile (page 12 of 14) Capital markets ITO transactions activity NOT EXHAUSTIVE Recent transaction activity 1 Buyer s name Announcement date TCV estimate (US$ million) Duration (years) AO/IO/ Both Contract details and services BNP Paribas January 2013 N/A N/A Implementation of TCS BaNCS for the banks custody operations Australia-based financial institution Europe-based clearing house Scotwest and Capital Credit Unions Credit Union Australia July 2012 N/A N/A Multi-year contract to deliver services for information systems July 2012 N/A 3 Infrastructure and application support services October 2011 N/A N/A Implementation of TCS BaNCS core banking solution October Implementation of TCS BaNCS online banking platform Nets September 2011 N/A N/A Application maintenance and development services PostFinance June Implementation of TCS BaNCS core banking application Credit Union Australia March 2011 N/A N/A Implementation of TCS BaNCS core banking application 1 Publicly-announced capital markets ITO transactions during 2010 to 2014 Source: Everest Group (2014), Transaction Intelligence Database 18

19 TCS Capital markets ITO profile (page 13 of 14) Capital markets ITO transactions activity NOT EXHAUSTIVE Recent transaction activity 1 Buyer s name Nedbank Investor Services Inter-connected Stock Exchange of India Announcement date TCV estimate (US$ million) Duration (years) AO/IO/ Both Contract details and services February 2011 N/A N/A Securities processing implementation of TCS BaNCS May 2010 N/A N/A Application services for developing a trading platform 1 Capital markets ITO transactions during 2010 to 2014; transaction activity presented here is based on information collected by Everest Group from public sources Source: Everest Group (2014), Transaction Intelligence Database 19

20 TCS Capital markets ITO profile (page 14 of 14) Key offshore AO delivery locations NOT EXHAUSTIVE Confirmed location for Capital markets AO 500-1,000 AO FTEs >5,000 AO FTEs AO FTEs 1,000-5,000 AO FTEs <100 AO FTEs Hungary China Mexico Colombia Ecuador Peru Brazil India Malaysia Singapore Thailand Philippines Indonesia Chile Uruguay South Africa Argentina Note: FTE strength represents the total number of AO FTEs across different industries for the particular country Source: Everest Group (2014) 20

21 Appendix 21

22 Market success 25 th percentile 75 th percentile Everest Group Performance Experience Ability Knowledge (PEAK) Matrix classifies service providers into Leaders, Major Contenders, and Emerging Players Everest Group Performance Experience Ability Knowledge (PEAK) Matrix High Major Contenders 2 nd or 3 rd quartile performance across market success and capability 75 th percentile Leaders Top quartile performance across market success and capability Emerging Players 4 th quartile performance across market success and capability Low Low 25 th percentile Delivery capability High 22

23 Market success Dimensions of service providers capability and market success underlying the PEAK Matrix Everest Group PEAK Matrix ACV of large active AO deals Major Contenders Leaders Number of large, active AO deals Emerging Players Delivery capability Scale Scope Domain investments Delivery footprint Buyer satisfaction Total company revenue Vertical-specific AO FTEs Lines of Business (LoB) served AO subfunctions Geographies served Proprietary solutions Certifications M&A and alliances Onshore, nearshore, and offshore capabilities Number of delivery centers and regions covered Customer experiences with service providers for vertical-specific AO services Client renewal activity 23

24 FAQs Does the PEAK Matrix assessment incorporate any subjective criteria? Everest Group s PEAK Matrix assessment adopts an objective and fact-based approach (leveraging service provider RFIs and Everest Group s proprietary databases containing providers deals and operational capability information). In addition, these results are validated / fine-tuned based on our market experience, buyer interaction, and provider briefings Is being a Major Contender or Emerging Player on the PEAK Matrix, an unfavorable outcome? No. PEAK Matrix highlights and positions only the best-in-class service providers in a particular functional/vertical services area. There are a number of providers from the broader universe that are assessed and do not make it to the PEAK Matrix at all. Therefore, being represented on the PEAK Matrix is itself a favorable recognition What other aspects of PEAK Matrix assessment are relevant to buyers and providers besides the PEAK Matrix position? PEAK Matrix position is only one aspect of Everest Group s overall assessment. In addition to assigning a Leader, Major Contender or Emerging Player title, Everest Group highlights the distinctive capabilities and unique attributes of all the PEAK Matrix providers assessed in its report. The detailed metric level assessment and associated commentary is helpful for buyers in selecting particular providers for their specific requirements. It also helps providers showcase their strengths in specific areas 24

25 At a glance With a fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and delivery of the next generation of global services Through its practical consulting, original research, and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing models, technologies, and management approaches Established in 1991, Everest Group serves users of global services, providers of services, country organizations, and private equity firms in six continents across all industry categories Dallas (Headquarters) info@everestgrp.com New York info@everestgrp.com Toronto canada@everestgrp.com London unitedkingdom@everestgrp.com Delhi india@everestgrp.com Stay connected Websites Blogs