Everest Group s PEAK Matrix TM for Insurance AO Service Providers Focus on TCS January 2016 Copyright 2016 Everest Global, Inc. This document has been licensed for exclusive use and distribution by TCS
Background and scope of the research Background of the research The insurance industry is grappling with increasing customer expectations, eroding margins & downward pricing pressure, an uncertain economy, and increasing regulatory requirements. To address these challenges, insurance firms are investing in technology solutions and adopting disruptive business models to enhance customer experience, contain cost, improve profitability, and avoid penalties As the insurance industry is evolving with new business priorities, IT service providers are looking to capitalize on the opportunity by tailoring their offerings with next-generation technologies, developing in-house solution frameworks/accelerators, collaborating with buyers to invest in innovation, setting up labs and CoEs to demonstrate and evaluate proof-of-concepts, as well as forming alliances with leading insurance-specific product and platform vendors In this research, we present detailed profiles of 21 service providers featured on the Insurance Application Outsourcing (AO) PEAK Matrix TM. Each service provider profile captures a comprehensive picture of their service suite, scale of operations, domain investments, and delivery locations This document focuses on TCS insurance AO experience and includes: Overview of the insurance AO service provider landscape Everest Group s assessment of TCS delivery capability and market success on PEAK Matrix Detailed insurance AO profile for TCS 2
This Everest Group report is a compendium of detailed profiles of 21 service providers featured on Everest Group s global insurance AO PEAK Matrix Banking Retail financial services (B2C 1 ) Retail banking Lending Cards Commercial banking (B2B 2 ) Capital markets BFSI Investment banking Asset management Custody and funds administration Brokerage Others Services industry Insurance Life and pensions Property and casualty Others 3 NOT EXHAUSTIVE Focus of report IT Infrastructure Outsourcing (IO) IT Application Outsourcing (AO) Business Process Outsourcing (BPO) Consulting Traditional IO Remote Infrastructure Management (RIM) Infrastructure Management Services (IMS) Cloud Application development Application 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 Digital services Services in next-generation technologies leveraged by enterprises to enable transformation including social, mobility, analytics, cloud, and others (artificial intelligence, robotics process automation, Internet of things, machine-to-machine, etc.). 1 Business-to-consumer relationships 2 Business-to-business relationships 3 Includes other insurance functions such as takaful and reinsurance 3
Everest Group s BFSI research is based on two key sources of proprietary information 1 Everest Group s proprietary database of 500+ large, active, multi-year AO contracts within BFSI (updated annually through primary data collection via service provider RFIs) 1 The database tracks the following elements of each large AO relationship: Buyer details including industry, size, and signing region Contract details including TCV, ACV, term, start date, service provider FTEs, and pricing structure Activity broken down separately for banking, capital markets, insurance, and by line of business (for example, investment banking, asset management, custody, fund administration, and brokerage) Scope includes coverage of buyer geography as well as functional activities Global sourcing including delivery locations and level of offshoring Service providers covered in the analysis 1 2 + 2 Everest Group s proprietary database of operational capability of 20+ BFSI AO service providers (updated annually through primary data collection via service provider RFIs) The database tracks the following capability elements for each service provider: Major BFSI AO clients and recent wins Overall revenue, total employees, and BFSI employees Recent BFSI-related developments BFSI AO delivery locations BFSI AO service suite Domain capabilities, proprietary solutions, and intellectual property investments Note: Confidentiality: 1 Assessment for Accenture, CSC, Hexaware, HP, IBM, and Mphasis 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 insurance buyers 2 Capgemini acquired IGATE in April 2015; the combined business unit has been analyzed as part of this assessment We continuously monitor market developments and track additional service providers beyond those included in the analysis 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
Market success 25 th percentile 75 th percentile TCS is positioned as a Leader on Everest Group PEAK Matrix for global insurance AO relationships - 2015 Everest Group Performance Experience Ability Knowledge (PEAK) Matrix for large insurance AO relationships 1 High Major Contenders Mphasis Dell Services L&T Infotech HP Tech Mahindra Mindtree Syntel Zensar CGI CSC Virtusa 75 th percentile Infosys HCL Wipro Leaders IBM Cognizant Accenture Capgemini + IGATE TCS Leaders Major Contenders Aspirants Star Performers Birlasoft Hexaware Low Aspirants Low 25 th percentile High Insurance 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 insurance sector (life & pensions, property & casualty, reinsurance, etc.); excludes banking, capital markets, and healthcare Note: Assessment for Accenture, CSC, Hexaware, HP, IBM, and Mphasis 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 insurance buyers 5
TCS Insurance ITO profile (page 1 of 11) 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/reinsurance companies, brokerages, and investment banks. TCS offerings include digital banking, core banking, payments, corporate actions, custody, governance, risk management, compliance, and analytics. Headquarters: Mumbai, India >US$500 million US$100-500 million <US$100 million Scale of BFSI subverticals Banking Capital markets Insurance Key financial parameters Revenue in US$ million Revenue 1 from the BFSI vertical Revenue 1 from other verticals Operating margin Website: www.tcs.com Geographical mix FY 2015; US$ million Service mix FY 2015; US$ million 100% = 15,454 100% = 15,454 Latin America (2.10%) India 6% Other APAC 9.3% Continental Europe 11.6% 16.7% UK MEA (2%) 51.90% North America Engineering & industrial services Assurance services BPO Infrastructure services Consulting (3%) (4.5%) Asset 8.5% 11.7% 13.8% 15.6% 40.2% leverage solutions (2.5%) ADM Enterprise solutions including BI 1 FY ends on March 31; total may have minor variation owing to rounding-off adjustments 27.0% 11,568 29.1% 13,442 4,986 5,767 26.9% 15,454 6,274 6,582 7,675 9,180 FY 2013 FY 2014 FY 2015 Services offered for the BFSI vertical: IT ADM/infrastructure services, BPO, consulting services, CRM solutions for wealth management and insurance, services for cards, payments, risk management & regulatory compliance, digital and data services, and TCS BaNCS (solutions for core banking, corporate actions, channels, custody, payments, core life & annuity, and property & casualty insurance platform) Major BFSI clients: ABN AMRO, Allianz Life, Aviva, AXA UK, BNP Paribas, Citigroup, Friends Life Management Services Limited, RBS, Bank of America, SBI, Standard Life, and JPMC 6
Market success 25 th percentile 75 th percentile TCS Insurance ITO profile (page 2 of 11) Insurance AO capability assessment and market success Everest Group PEAK Matrix for Insurance AO 75 th percentile High Leaders TCS Major Contenders IBM Cognizant Infosys Accenture CGI Capgemini + IGATE HCL L&T Infotech CSC Tech Mahindra HP Wipro Mphasis Virtusa Mindtree Dell Services Zensar Syntel Birlasoft Hexaware Low Aspirants Low 25 th percentile High Insurance AO delivery capability (Scale, scope, domain investments, delivery footprint, and buyer satisfaction) Leaders Major Contenders Aspirants Star Performers Capability dashboard Insurance lines of business Geographic scope Life & pensions Property & casualty North America EMEA Others Latin America APAC Key technology spend areas Risk & regulatory compliance Established: Mature capabilities with high adoption Emerging: Nascent capabilities with limited adoption Market share by active ACV (Est.) >15% >15% Mobility Social Analytics Cloud Credible: Strong capabilities with rising adoption Market share by number of contracts (Est.) High PEAK Matrix dimensions assessment Dimension Rating Market success Scale Scope Domain investments Delivery footprint Innovation Buyer satisfaction Low Strengths Extensive breadth and depth of insurance expertise across lines of business, geographies, and technologies with a global delivery presence Large client base, with long-term relationships with global insurance and reinsurance firms Broad portfolio of products/platforms for the insurance industry that includes a comprehensive insurance platform with customized modules across LoBs (TCS BanCS) Strong focus on innovation and leverage of digital themes to launch targeted solutions; portfolio augmented by multiple solutions and accelerators launched recently in the areas of predictive analytics, telematics, risk assessment, connected ecosystem, and agent/broker network empowerment Deep domain expertise, ability to source the right mix and quality of resources, agile delivery model, and strong leadership are some of the key strengths cited by clients Areas of improvement Clients cite efficient collaboration between onshore and offshore leads as lagging that of global majors Needs to work on demonstrating industry thought leadership as well as increase its focus on adopting a consultative approach, especially while working on greenfield engagements 7
TCS Insurance ITO profile (page 3 of 11) AO domain investments Proprietary solutions (representative list) Line of business Insurance Solutions Proprietary solutions Connected Auto: Enables insurers to transform customer experience as well as gather data for accurately pricing risk by tapping into the advancements of the connected car ecosystem Contact Centre Modernization Using Salesforce: Helps insurers to initiate transformation towards a consolidated desktop Connected Wellness: A platform solution that empowers and encourages individuals to adopt, improve, and maintain a healthy lifestyle by facilitating continuous engagement. It harmonizes the competitive, crowded world of wearables, devices, and apps and enables collaboration tailored to the needs of the individual Data Strategy for Insurance: Enables insurers to leverage data as a strategic asset in driving business growth and achieving operational efficiencies. Digital Marketing Solution: Integrates data with marketing and channel development, in order to improve digital customer experience, productivity, and Return on Marketing Investment (ROMI) Forms Modernization: Enables insurers to derive more from their legacy modernization initiatives, in line with the legacy modernization strategies Insurance API platform: A cloud-based platform to integrate digital channels with enterprise IT systems. The platform provides a developer portal which acts as a vital link for internal and third party developers to access and consume the APIs provided by insurance carriers Integrated Multi-Channel Design for Insurers: Uses TCS proprietary Dynamic UI engine to integrate various media channels to target customers providing benefits such as better management of quote for policy conversion and customer intimacy. The solution enables interaction with existing/prospective customers on multiple channels such as mobile, social media, retail location, website, and promotional event Internet of Things: End-to-end IoT consulting, solutions, and delivery services, providing customized, business oriented technology products and offerings, enabling enterprises to gain a competitive edge in the IoT ecosystem 8
TCS Insurance ITO profile (page 4 of 11) AO domain investments Proprietary solutions (representative list) (continued) Line of business Insurance (continued) Solutions Proprietary solutions IT IS Managed Services: Offers flexibility to focus on core business rather than handling day-to-day operations and technology issues Rules Extraction Services: Business rules repository to manage, govern, and analyze the insurance business rules TCS BaNCS: A comprehensive web-based, flexible, and functionally rich solution catering to end-to end insurance operations starting from product configuration, new business, underwriting, policy administration, claims administration, intermediary, and commission management. Modules include: Product Workbench: Helps to configure and personalize product offerings through a guided and simulated approach, which helps in bringing out products faster to the market Extended Warranty: Helps in increasing efficiency of agreements and claims processing for extended warranty providers Workers' Compensation: Facilitates optimized cost of operations, better integration with partners, and comes with an agents portal Property and Casualty: A flexible platform for P&C insurers catering to different insurance processing needs such as quotations, policy management, and claims Life, Annuity, and Pensions: An end-to-end policy administration solution suite that supports customer management, product definition, new business, underwriting, quote, payouts, insurance accounting, and reinsurance Reinsurance: Offered for assumed and ceded reinsurance in the P&C and life domains Agent's workbench: An easy-to-use, portable solution for agents that facilitates all customer management and new business functions 9
TCS Insurance ITO profile (page 5 of 11) AO domain investments Proprietary solutions (representative list) (continued) Line of business Insurance (continued) Solutions Proprietary solutions TCS digital insurance agent solution: A tablet-based application available both in native ios and in hybrid version (powered by PhoneGap framework). It operationalizes all the day-to-day activities of insurance agents on a mobile tablet, enabling them to be more effective at both sales and customer service TCS digital insurance telematics analytics and insights solution: A big data-based solution to gather and analyze the mass of telematics data (petabytes) and develop business insights from the same TCS digital insurance virtual advisor solution: A humanized computer interface that aims to provide selfservice to the web user. The solution automatically senses user s need for assistance on a web page and pops up an animated character prompting help. Users can interact with the animated character either by speaking to the character or by using a web chat TCS Varcy: A D2C Retirement platform combined with Pega software, that delivers an integrated and consistent view of retirement planning, as well as enables insurers to better support customer needs such as customer engagement, service, propositions, and underwriting Virtual retirement counselor: A digital pre- / post-retirement proposition to encourage saving, increase customer advocacy, and reduce operating cost 10
TCS Insurance ITO profile (page 6 of 11) AO domain investments Proprietary solutions (representative list) (continued) Line of business Insurance (continued) Solutions Frameworks ibids: Business intelligence and decision support framework built on TCS proprietary BIDS framework SynQuanOnto: Collaborative domain knowledge framework for insurance Solution accelerators 720 degree customer view: Offers a unified view of customer by integrating internal data and leveraging big data analytics Guidewire Integration: TCS s Transformation Delivery Group (TDG) has launched a Guidewire CoE, which is engaged in developing solutions for supporting insurance companies in their policy administration transformation Predictive Underwriting Framework for Life Insurance: A framework for using predictive analytics in complex scenarios to help underwriters get insights into factors such as claim history, previous decisions, and social information for making analytical underwriting decisions Rite Rate: A tool to test premium calculations and rate changes Telematics-based underwriting: Helps in collating and drawing analytical inferences for underwriting using telematics and traditional factors for auto insurance Text Analytics for UW workbench: Helps to get key information from loss report, without needing the underwriter to go through the whole document TCS NextGen Underwriting Workbench: Caters to risk underwriting for commercial property, general liability, and commercial package lines of business 11
TCS Insurance ITO profile (page 7 of 11) AO domain investments Acquisitions (representative list) Target Date Capabilities added IT Frontier Corporation (ITF) a Mitsubishi Corporation subsidiary 2014 Strengthened capabilities to service a number of leading Japanese corporations across financial services, insurance, retail, hi-tech, and manufacturing verticals. ALTI SA (France) 2013 Strengthened capabilities to service customers in France and other regions in Europe. Citigroup Global Services Limited TKS-Teknosoft (Switzerland) 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 also enables TCS to create platforms for the future and integrate TCS strong domain expertise in operations, along with its suite of products for the financial services sector. 2006 Expansion of TCS portfolio of products for the banking and financial services market. Comicrom (Chile) 2005 Enhancement of BPO capabilities for the BFSI space, thus, enabling TCS to offer integrated solutions. Phoenix Global Solutions (U.S.) 2004 IT, BPO, and customer care services for the insurance industry. 12
TCS Insurance ITO profile (page 8 of 11) AO domain investments Key alliances (representative list) Alliance partner Adobe Informatica Microsoft Pega Pitney Bowes Salesforce.com SAS TIBCO (Several) Purpose of alliance Go-to-market strategy for the insurance industry in North America. Joint service model including pre-sales and post-sales services. System integration and implementation partner. Strengthen TCS BPM practice and provide BPM solutions and services. Partnership in consulting and implementing customer communication technologies and solutions. Premier consulting and implementation partner. Consulting and IT implementation partner. Mutual support for marketing, sales, and technology enhancement initiatives. General enterprise-level alliances with vendors such as Adobe, Attensity, Attivio, Bian, BlinkMobile, Boxtone, Checkmarx, Cisco, Clarabridge, EMC Isilon, HP, IBM, Liferay, Microsoft, Microstrategy, Neospeech, Oracle, Pentaho, Perfecto, Perpetuuiti, SAP, Seclore, Sun, Teradata, Testplant, Ymedia Labs, Veryday, and for solutions across BFSI and other verticals. 13
TCS Insurance ITO profile (page 9 of 11) Insurance ITO transactions activity NOT EXHAUSTIVE Recent transaction activity 1 Buyer s name A North American leading P&C insurer Nedgroup Insurance Company Announcement date TCV estimate (US$ million) Duration (years) AO/IO/both Contract details and services January 2015 N/A N/A AO Modernization, rationalization, and simplification of application portfolio supporting several business capabilities. November 2014 N/A N/A AO Implementation of TCS BaNCS insurance for policy administration system. Friends Life August 2014 N/A N/A AO Configuration and implementation of TCS BaNCS to deliver seamless service for customers across Asia Pacific and Middle East. A North American insurance company A leading global insurance major July 2014 N/A N/A AO Support and enhancement of core IT applications. July 2014 N/A N/A AO To develop customer-centric sales applications using digital technologies. Reaal NV June 2014 N/A 5 AO Modernization of mainframe applications to build a scalable technology platform for the company s life insurance portfolio. Tryg December 2013 N/A 4 AO Infrastructure services including Financial Service Agency-compliant private cloud. 1 Publicly-announced insurance ITO transactions during 2012-2015 14
TCS Insurance ITO profile (page 10 of 11) Insurance ITO transactions activity NOT EXHAUSTIVE Recent transaction activity 1 (continued) Buyer s name A British multinational insurance company Announcement date TCV estimate (US$ million) Duration (years) AO/IO/both Contract details and services April 2013 N/A N/A AO Application development, maintenance, and assurance services across multiple lines of business. Friends Life March 2012 2,200 15 Both Policy migration from the company's legacy mainframe systems onto Diligenta's inhouse and proprietary database, and content management system, BaNCS. Nedgroup Insurance Company February 2012 N/A N/A AO Implementation of TCS BaNCS platform to serve as the new policy administration system. 1 Publicly-announced insurance ITO transactions during 2012-2015 15
TCS Insurance ITO profile (page 11 of 11) Key BFSI offshore AO delivery locations NOT EXHAUSTIVE Confirmed location for insurance AO >5,000 AO FTEs 1,000-5,000 AO FTEs Hungary 500-1,000 AO FTEs China 100-500 AO FTEs Mexico Ecuador Peru Colombia Brazil India Singapore Thailand Philippines Indonesia Malaysia <100 AO FTEs Chile Uruguay South Africa Argentina 1 FTE strength represents the total number of AO FTEs across the BFSI vertical for that particular country 16
Appendix 17
25 th percentile Market success 75 th percentile The service providers were mapped on Everest Group s Performance Experience Ability Knowledge (PEAK) Matrix Everest Group Performance Experience Ability Knowledge (PEAK) Matrix for Application Outsourcing 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 Low Aspirants 4 th quartile performance across market success and capability Low 25 th percentile High AO capability (Scale, scope, domain investments, delivery footprint, innovation, and buyer satisfaction) Everest Group s PEAK Matrix is a composite index of a range of distinct metrics related to a service provider s scale, scope, technology/domain investments, delivery footprint, innovation, buyer satisfaction, and resultant market success in the context of a given outsourcing function. 18
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 Yearly vertical-specific AO revenue growth Aspirants Delivery capability Scale Scope Domain investments Delivery footprint Innovation Buyer satisfaction Total company revenue Contribution of vertical-specific AO revenue to the total company revenue Lines of Business (LoBs) served AO subfunctions Geographies served Proprietary solutions Certifications M&A and alliances Onshore, nearshore, and offshore capabilities Number of delivery centers and regions covered Innovative solutions Innovative engagement models Customer experiences with service providers for verticalspecific AO services Client renewal activity 19
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 Aspirant 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 Aspirant 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 20
FAQs (page 2 of 2) 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 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 (e-mail 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 21
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 www.everestgrp.com and research.everestgrp.com. Dallas (Headquarters) info@everestgrp.com +1-214-451-3000 New York info@everestgrp.com +1-646-805-4000 Toronto canada@everestgrp.com +1-647-557-3475 London unitedkingdom@everestgrp.com +44-207-129-1318 Delhi india@everestgrp.com +91-124-284-1000 Stay connected Websites www.everestgrp.com research.everestgrp.com Twitter @EverestGroup Blog www.sherpasinblueshirts.com