Everest Group PEAK Matrix TM for Mortgage BPO Service Providers

Transcription

1 Everest Group PEAK Matrix TM for Mortgage BPO Service Providers Focus on TCS June 2015 Copyright 2015 Everest Global, Inc. This document has been licensed for exclusive use and distribution by TCS

2 Introduction and scope Everest Group recently released its report titled Mortgage BPO Service Provider Landscape with PEAK Matrix TM Assessment This report analyzes the changing dynamics of the mortgage BPO landscape and assesses service providers across several key dimensions. As a part of this report, Everest Group classified 14 service providers on the Everest Group Performance Experience Ability Knowledge (PEAK) Matrix for mortgage BPO into Leaders, Major Contenders, and Emerging Players. The PEAK Matrix is a framework that provides an objective, data-driven, and comparative assessment of mortgage BPO service providers based on their absolute market success and delivery capability. Based on the analysis, TCS emerged as a Leader. This document focuses on TCS mortgage BPO experience and capabilities. It includes: TCS position on the Everest Group Mortgage BPO PEAK Matrix Detailed mortgage BPO profile of TCS Buyers can use the PEAK Matrix to identify and evaluate different service providers. It helps them understand the service providers relative strengths and gaps. However, it is also important to note that while the PEAK Matrix is a useful starting point, the results from the assessment may not be directly prescriptive for each buyer. Buyers will have to consider their unique situation and requirements, and match them against service provider capability for an ideal fit. 2

3 Everest group classification of mortgage value chain Origination Servicing Sourcing Credit/collateral evaluation Underwriting Loan funding Processing Account closure / foreclosure Lead generation Application management Loan pricing Credit risk assessment Fraud risk assessment Document verification Collateral risk underwriting Underwriting decision Underwriting audit Document draw Condition clearing and validation Wire request and approval Loan setup Payment processing Customer service Default management Refinance / loan modification Short sale / foreclosure Loan document indexing and verification Rate locking Risk management Post closure document review Collections Securitization support Purchase review and approval Credit reviews MERS registration 1 Collateral review HUD1 preparation 2 Post funding review Securitization support Document management Analytics Regulatory compliance and reporting 1 Mortgage electronic registration system 2 HUD1 settlement statement is a standard form in use in the United States of America Note: This report covers vertical-specific BPO within the mortgage space. It does not include coverage of horizontal business processes such as F&A, HR, procurement, and contact centers 3

4 Market success (Mortgage BPO revenue and clients) 25 th percentile 75 th percentile Everest Group PEAK Matrix 2015 mortgage BPO market standing Performance Experience Ability Knowledge Everest Group Performance Experience Ability Knowledge (PEAK) Matrix for mortgage BPO 1 High Major Contenders Mphasis 75 th percentile IBM Leaders Accenture TCS Wipro Leaders Major Contenders Emerging Players Infosys Cognizant Genpact Sutherland Global Services WNS HCL Low Low EXL Emerging Players Xchanging IGATE 25 th percentile Mortgage BPO delivery capability (Scale, scope, technology solutions & innovation, and delivery footprint) High 1 Service providers scored using Everest Group s proprietary scoring methodology Note: Analysis for IBM is based on Everest Group s proprietary Transaction Intelligence (TI) database, service providers public disclosures, and Everest Group s interactions with buyers Source: Everest Group (2015) 4

5 TCS (page 1 of 5) Mortgage BPO competitive position and assessment Market share by buyer size (number of active contracts) Small Medium Large 2% 10% 5% Market share by mortgage BPO processes (number of FTEs) Originations Servicing 23% 40% Overall market share By clients By FTEs By revenue 5% 32% 21% Delivery capability assessment Assessment dimension Rating Remarks Scale Scope Technology solutions and innovation Delivery footprint High Low TCS not only has high revenue in the broader firm, but also has a higher focus on mortgage BPO as part of its overall portfolio of services Provides a holistic suite of services across mortgage value chain and has a broad portfolio across buyer segments Significant technology capabilities, but needs to increase their leverage in its deals Highly leverage of offshore but needs to increase onshore presence too Overall remarks With substantial capabilities across dimensions, TCS is a Leader in the mortgage BPO PEAK Matrix TCS is among the largest mortgage BPO service providers, both by revenue as well as scale, and provides a holistic suite of services TCS has significant technology capabilities with focused offerings and investments in high growth areas such as analytics, regulatory compliance, and automation However, it can do better in translating that into greater technology leverage in its deals TCS' mortgage portfolio has high exposure to Citi and thus, it runs high concentration risk While it has strong offshore capability, TCS needs to augment its onshore capabilities to deliver more judgment-intensive services Source: Everest Group (2015) 5

6 TCS (page 2 of 5) Mortgage BPO overview Company overview Tata Consultancy Services (TCS) is an IT services, consulting, and business solutions organization. TCS extensive experience with diverse BFS organizations has helped it to develop in-depth domain expertise across all banking subproducts. The offerings span consumer banking and corporate business including retail banking, cards, loans, trade services, cash management, and capital markets (includes wealth & asset management and investment banking). TCS also offers platform solutions for specific business functions Key leaders Dinanath Kholkar, Global Head, Business Process Services Arun Batra, Head, BFSI BPS Swati Oberoi, Head, Mortgage BPS Headquarter: Mumbai, India Website: Suite of services Credit/collateral evaluation Payments processing Account closure/foreclosure Underwriting Quality assurance Revenue (US$ million) Number of FTEs 5,690 6,700 7,100 Number of clients Recent acquisitions and partnerships 2014 TCS is in the process of tying up with mortgage platform service providers in North America 2012 Manila delivery center for mortgage customer service support 2011 Delivery center in Mexico for Originations Innovation in mortgage BPO TRAPEZE banking suite has been expanded to include new tools such as affidavit, loan modification, and automated payment history SAFE Act licenses in 44 states in North America Flexible staffing and pricing solutions Recent developments FORE : Transformation model for business Domain Academy for training resources on domain and process skills, e.g., mortgage and trade 6

7 TCS (page 3 of 5) Mortgage BPO capabilities and key clients Key mortgage BPO engagements Client name Processes Region Client since Citi Originations and servicing North America 2008 Nationstar Originations and servicing North America 2012 Top three U.S. wholesale lender Originations North America 2012 Top three U.S. bank Originations North America 2013 Mortgage BPO FTE mix by processes FTEs in numbers Originations 32% 100% = 7,100 Mortgage BPO revenue mix by geography Revenue in US$ million South EMEA America 10% 2% APAC 12% Mortgage BPO FTE split by delivery location FTEs in numbers Mortgage BPO number of contracts by buyer size 1 Number of active contracts 100% = % = 7, % = 18 Nearshore Onshore 2% 2% Small 22% 68% Servicing 76% North America 96% Offshore Medium 17% 61% Large 1 Buyer size is defined as large (>US$10 billion in revenue), medium (US$5-10 billion in revenue), and small (<US$5 billion in revenue) Note: Based on contractual and operational information as on December 2014 Source: Everest Group (2015) 7

8 TCS (page 4 of 5) Mortgage BPO technology solutions/tools Mortgage-specific solutions/tools TCS FORE simplification methodology : Improves efficiencies and effectiveness and enables mortgage providers with operational agility while ensuring regulatory compliance Analytics TCS Mortgage Analytics solution : Conducts market, volume and demand price elasticity studies. Helps mortgage providers identify appropriate business strategies TCS BαNCS Platform: Holistic suite of solutions for banks, capital market firms, insurance companies, and diversified financial institutions. Designed to run as a scalable and robust service, fully integrated with existing business models, enterprise infrastructures, and technology architectures TCS Risk & Compliance Solution: Facilitates testing transactions against business requirements, policy, and regulations for purposes of ORM, quality control / quality assurance, or compliance assessment TRAPEZE :TRAPEZE delivery excellence framework encompasses practices, solution accelerators, and methodologies for seamless transition, superior delivery, transparency, and business value creation Automation TCS Robotic Process Automation: Helps enhance process efficiencies and compliance while providing greater business agility. With over 50 thinking and self-learning brain and executing arm robot components, TCS' modular deployment approach addresses any business process scenario. It can be deployed across business processes, technologies, and lifecycles, with data security holistically orchestrated into the implementation process 8

9 TCS (page 5 of 5) Mortgage BPO location landscape Guadalajara Cincinnati Midland Gandhinagar Mumbai Gurgaon Kolkata Pune Chennai Manila Quito Santiago Source: Everest Group (2015) 9

10 Appendix 10

11 Market success (Mortgage BPO revenue and clients) 25 th percentile 75 th percentile Everest Group classifies the mortgage BPO service provider landscape into Leaders, Major Contenders, and Emerging Players on the Everest Group PEAK Matrix Everest Group Performance Experience Ability Knowledge (PEAK) Matrix 1 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 Mortgage BPO delivery capability (Scale, scope, technology solutions & innovation, and delivery footprint) High 1 Service providers scored using Everest Group s proprietary scoring methodology 11

12 Market success Service providers are positioned on PEAK Matrix based on evaluation across two key dimensions Leaders Measures success achieved in the market. Captured through mortgage BPO revenue and number of clients Major Contenders Emerging Players Delivery capability Measures ability to deliver services successfully. Captured through four subdimensions Scale Scope Technology solutions and innovation Delivery footprint Measures the scale of operations (overall company revenue and relative focus on the vertical) Measures the scope and depth of services provided across buyer segments and processes Measures the capability and investment in technology solutions and ability to align towards where the market is headed to deliver valueadded services (innovation) with high technology leverage Measures the delivery footprint across regions and the global sourcing mix 12

13 FAQs (page 1 of 2) Does the PEAK Matrix assessment incorporate any subjective criteria? The Everest Group s PEAK Matrix assessment adopts an objective and fact-based approach (leveraging service provider RFIs and the 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. 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 in itself a favorable recognition What other aspects of the PEAK Matrix assessment are relevant to buyers and providers besides the PEAK Matrix position? The PEAK Matrix position is only one aspect of the 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 to the buyers in selecting particular providers for their specific requirements. It also helps providers showcase their strengths in specific areas What are the incentives for buyers and providers to participate / provide input to the PEAK Matrix research? Participation incentives for buyers include a summary of key findings from the PEAK Matrix assessment Participation incentives for providers include adequate representation and recognition of their capabilities/success in the market place, and a copy of their own profile that is published by Everest Group as part of the compendium of PEAK Matrix providers profiles 13

14 FAQs (page 2 of 2) What is the process for a service provider to leverage their PEAK Matrix positioning status? Providers can use their PEAK Matrix positioning in multiple ways including: Issue a press release declaring their positioning/rating Customized PEAK Matrix profile for circulation (with clients, prospects, etc.) Quotes from the Everest Group s analysts could be disseminated to the media Leverage the PEAK Matrix branding across communications ( signatures, marketing brochures, credential packs, client presentations, etc.) The provider must obtain the requisite licensing and distribution rights for the above activities through an agreement with the designated PoC at Everest Group 14

15 About Everest Group Everest Group is a consulting and research firm focused on strategic IT, business services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problemsolving skills and original research. Details and in-depth content are available at and research.everestgrp.com. 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 research.everestgrp.com Blog