Back office outsourcing: Key market research findings
- The market is growing due to the increasing demand for better efficiency
- The services segment accounts for majority of the market share
- Key vendors—Accenture, Infosys, IBM, and TCS
Technavio’s market research analysts estimate the global back office outsourcing market in the financial services sector to grow at a CAGR of more than 7% between 2016 and 2020. The greater efficiency achieved through back office outsourcing is the primary driver for the market. Expansion through outsourcing of resource intensive back office functions such as monitoring budgets, maintenance of database, and fielding queries helps companies to refocus on the activities that are vital for their growth. Outsourcing of administrative and procedural back office responsibilities also helps bring down a huge chunk of the burden of employees. At present, the Americas occupy over 47% of the overall market share to dominate the market, with the US being the key contributor. The implementation of various acts and reforms such as Dodd-Frank Act, HIPAA, Securitization Reform, Consumer Protection Reform, Credit Rating Agency Reform, and Volcker Rule is the driving force behind the back office outsourcing market in the financial services sector in the Americas during the forecast period.
The new market research report from Technavio presents a breakdown and analysis of the back office outsourcing segments by category.
“The increased adoption of digital and mobile solutions is the latest trend in the market. Digital technologies enable a diverse range of banking innovations. These include innovative identification methods utilizing biometrics, near field communication (NFC) systems allowing contactless payment systems, other technologies such as PayPal’s Beacon and Apple’s iBeacon, which operates on user proximity-based Bluetooth connections. The increase in the use of mobile devices for banking applications is also on the rise as third-party service providers are providing these applications,” says Amit Sharma, Lead Analyst, ICT, Technavio Research.
In 2015, the services segment accounted for the majority share of the global back office outsourcing market in the financial services sector by occupying almost 54% of the market share. The two major outsourced services under this segment include information technology outsourcing (ITO), which occupies around 89% of the market, and business process outsourcing (BPO). The growing need for digital technologies to improve business efficiency, increased regulatory compliance costs, and competition from non-banking organizations in areas such as payments are factors that will fuel growth of this segment during the forecast period.
The key vendors in the global back office outsourcing market in the financial services sector include Accenture, Infosys, IBM, and TCS. This market is highly fragmented due to the presence of numerous large and small players. In this market, the vendors differentiate themselves by offering innovative, cost-effective, and outcome-based solutions such as BPaaS. Vendors are also increasing their profitability by implementing innovative solutions as per clients’ requirement with flexible pricing, which helps organizations to address cost savings issues. Competition in this market is expected to intensify with the entry of new players during the forecast period.
A more detailed analysis is available in the Technavio report, Global Back Office Outsourcing Market in the Financial Services Sector.
We can customize reports by other regions and specific segments upon request.
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