Everest Group PEAK Matrix TM for Life and Pensions Insurance BPO Service Providers Focus on TCS November 2015 Copyright 2015 Everest Global, Inc. This document has been licensed for exclusive use and distribution by TCS
Introduction and scope Everest Group recently released its report titled Life and Pensions Insurance BPO Service Provider Landscape with PEAK Matrix TM Assessment 2015. This report analyzes the changing dynamics of the Life and Pensions (L&P) insurance BPO landscape and assesses service providers across several key dimensions. As a part of this report, Everest Group updated its classification of 19 service providers on the Everest Group Performance Experience Ability Knowledge (PEAK) Matrix for L&P insurance BPO into Leaders, Major Contenders, and Aspirants. The PEAK Matrix is a framework that provides an objective, data-driven, and comparative assessment of L&P insurance 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 L&P insurance BPO experience and capabilities of TCS. It includes: Position of TCS on the Everest Group L&P insurance BPO PEAK Matrix Detailed L&P insurance 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
Everest Group s definition of BFSI includes the following three segments Banking, Financial Services and Insurance (BFSI) Focus of this report Banking Retail financial services (B2C 1 ) Cards Retail banking Lending Commercial banking (B2B 2 ) Capital Markets Investment banking Asset management Custody & fund administration Brokerage Insurance Life & pensions Property & casualty Reinsurance Notes There are multiple operating-model alternatives ranging from internal shared services to Global In-house Centers (GICs) to third-party outsourcing. This report focuses primarily on third-party models This report covers vertical-specific BPOs within the L&P insurance space. It does not include coverage of horizontal business processes such as F&A, HR, procurement, and contact centers Health insurance BPO is not covered in this report 1 Business-to-Consumer relationships 2 Business-to-Business relationships 3
Market success (Revenue, number of clients, and revenue growth) 25 th percentile 75 th percentile Everest Group PEAK Matrix 2015 L&P insurance BPO market positions Performance Experience Ability Knowledge Everest Group Performance Experience Ability Knowledge (PEAK) Matrix for L&P insurance BPO 1 75 th percentile High Leaders Capita TCS Leaders Major Contenders Aspirants Major Contenders HCL WNS Infosys Genpact Dell EXL CSC Cognizant Accenture IGATE Xerox Serco Sutherland Global Services Syntel NIIT Technologies Tech Mahindra MphasiS Low Aspirants Low 25 th percentile High L&P insurance BPO delivery capability (Scale, scope, technology solutions & innovation, delivery footprint, and buyer satisfaction) 1 Service providers scored using Everest Group s proprietary scoring methodology Notes: Assessment for Accenture, Capita, CSC, and Tech Mahindra excludes service provider inputs on this particular study and is based on Everest Group s estimates that leverage its proprietary Transaction Intelligence (TI) database, ongoing coverage of these service providers, their public disclosures, and interaction with buyers. Since L&P insurance BPO PEAK Matrix assessment has been done for the first time in 2015, Star Performer assessment will be done from 2016 onwards Source: Everest Group (2015) 4
TCS (page 1 of 5) Everest Group assessment Best-in-class Very high High Medium high Medium Medium low Low Not mature Market success assessment TCS Peer set median 1 TCS Peer set median L&P insurance BPO revenue US$ million 41 YOY Growth % revenue 12% 28% 330 ~8x L&P insurance BPO clients Number of clients 7 YOY Growth % clients 6% 22 38% ~3x Delivery capability assessment Dimension Rating Remarks Scale Scope Technology solutions & innovation Delivery footprint Buyer satisfaction Best-in-class scale and stability, owing to high overall company revenue and greater contribution of L&P insurance BPO than industry benchmarks An exhaustive coverage of buyer segments and processes within L&P insurance BPO; significant capabilities in judgment-intensive processes Best-in-class capabilities powered by strong technology-led offerings in core BPO processes and value-added services such as automation, analytics, and risk management Good delivery mix in terms of FTEs at onshore and offshore locations; high number of centers Best-in-class overall score, with key strengths being domain expertise and relationship management Key strengths Areas of improvement With the second largest market share by revenue and a large client base, TCS has achieved very high market success. This, in conjunction with best-in-class BPO delivery capabilities, has ensured an uncontested position among Leaders for it on the L&P insurance BPO PEAK Matrix It has best-in-class revenue-spread across buyer segments and processes within L&P insurance BPO, reflecting its low exposure to market risk and capability to serve diverse demands It is strong on technology and is capable of delivering holistic suites, end-to-end platforms, and augmentation solutions It has developed very good BPSDA capabilities, primarily because of focused efforts in building in-house RPA solutions It enjoys best-in-class buyer satisfaction ratings Revenue distribution for TCS is very much concentrated, with United Kingdom accounting for almost all of its revenue in L&P insurance BPO which raises market risk. It needs to cover other geographies in terms of revenue share It needs to strengthen its offerings around analytics and regulatory reporting, along with increasing deployment rate of RPA solutions Its delivery footprint is limited to India and United Kingdom. Further, there is relatively higher onshore component. It needs to explore nearshore locations to enhance cost effectiveness 1 Median based on 15 L&P insurance BPO service providers who participated in this particular research Source: Everest Group (2015) 5
TCS (page 2 of 5) L&P insurance BPO overview Company overview Tata Consultancy Services (TCS) is an IT services, consulting, and business process services organization. TCS extensive experience with diverse insurance organizations has helped it develop in-depth domain expertise. Within insurance, TCS deploys its BaNCS platform, analytics and automation to deliver on value based business outcomes for its customers and provides an enhanced customer experience to enable increased competitiveness and retention. Deploying its Robotic Process Automation (RPA) solution with its modular approach, TCS can address any business scenario of insurers. Key leaders Dinanath Kholkar, Vice President and Global Head, Business Process Services (BPS) Arun Batra, Global Head, BFSI, BPS VR Krishnan, Head, Insurance BPO Services Headquarters: Mumbai, India Website: www.tcs.com Suite of services New business and underwriting support Policy servicing and claims transformation Insurance CRM solutions customer interaction management Robotic Process Automation Analytics and insights Actuarial services 1 Includes horizontal services such as F&A, SCM, and HR Source: Everest Group (2015) 2012 2013 2014 Revenue (US$ million) 400* 375* 330 Number of FTEs 5,100* 5,150* 5,100 Number of clients 14 16 22 Recent acquisitions and partnerships 2014: Partnered with CII, to drive completion of UK Insurance certifications 2012: Formed a joint venture with Mitsubishi to establish an IT, BPO, and infrastructure services delivery center in Japan 2012: TCS BaNCS signed an agreement with Savvis, a Century Link company in cloud infrastructure, to offer services on a cloud-enabled hosted environment Recent developments 2014: Developed customer life time value and built churn models, cross sell / up-sell, win-back, and market basket analysis 2012: Invested in developing platform model for L&A closed books for North America 2012: Invested in enhancing its existing competencies in actuarial and business process management (BPM) services 2012: FORE TM provides customers with operational agility and regulatory compliance 2012: Signed a 15-year contract with Friends Life UK for US$2.2 billion 6
TCS (page 3 of 5) L&P insurance BPO key delivery locations Cincinnati Peterborough Liverpool Bristol Gurgaon Pune Mumbai Kolkata Bangalore Nagpur Source: Everest Group (2015) 7
TCS (page 4 of 5) L&P insurance BPO capabilities and key clients Key L&P insurance BPO engagements Client name Region Client since year Top five superannuation player in Australia APAC 2013 Friends Life Europe 2012 NEST Europe 2010 Fortune 100 annuity and retirals provider US 2010 Fortune 500 financial services and annuity provider US 2008 Phoenix Group Europe 2006 India operations of a US top five life insurer APAC 2008 L&P insurance BPO FTE mix by processes covered FTEs in numbers 100% = 5,100 New business Others management 7% 12% Claims processing 32% 48% Policy servicing and reporting Insurance BPO revenue mix by geography Revenue in US$ million North America 100% = 330 7% 3% APAC 90% Europe Split of FTEs by location FTEs in numbers Offshore 53% 100% = 5,100 47% Onshore 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) Notes: Based on contractual and operational information as on December 2014 Source: Everest Group (2015) Insurance BPO number of contracts by buyer size Number of active contracts Small 38% 100% = 22 Medium 1% 61% Large 8
TCS (page 5 of 5) L&P insurance BPO technology solutions Tools Solution description RPA TCS Robotic Process Automation (RPA) helps to enhance process efficiencies, with greater business agility. It requires no change in underlying systems and processes. Repetitive processes are executed by features such as optical character recognition & intelligent character recognition, document & image parsers, macros & scripts, and record. TCS Digital Insurance Agent Solution A tablet-based application that operationalizes all the day-to-day activities of insurance agents on a mobile tablet. TRAPEZE TCS delivery ecosystem consists of governance, reporting, workflow, document management, and process management applications, along with domain-specific accelerators. Year launched 2014 2012 2011 2009 Number of clients 4 5 9 8 TCS BaNCS insurance platform (BPaaS) TCS offers the best-in-class web-based insurance product suite. It ensures efficient service delivery across all lines of business (property & casualty, individual & group life, and reinsurance). 9
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Market success (Revenue, number of clients, and revenue growth) 25 th percentile 75 th percentile Everest Group classifies the L&P insurance BPO service provider landscape into Leaders, Major Contenders, and Aspirants on the Everest Group PEAK Matrix Everest Group Performance Experience Ability Knowledge (PEAK) Matrix 1 for L&P insurance BPO High Major Contenders 2 nd or 3 rd quartile performance across market success and delivery capability 75 th percentile Leaders Top Quartile performance across market success and delivery capability Low Aspirants 4 th quartile performance across market success and delivery capability Low 25 th percentile L&P insurance BPO delivery capability (Scale, scope, technology solutions & innovation, delivery footprint, and buyer satisfaction) 1 Service providers scored using Everest Group s proprietary scoring methodology on page 12 Source: Everest Group (2015) High 11
Market success Service providers are positioned on PEAK Matrix based on evaluation across two key dimensions Measures success achieved in the market. Captured through L&P insurance BPO revenue, number of clients, and y-o-y revenue growth Major Contenders Aspirants Leaders Delivery capability Measures ability to deliver services successfully Captured through five subdimensions Scale Measures the scale of operations (overall company revenue and relative focus on the vertical) Scope Measures the scope of services provided across processes, geographies, and buyer size Technology solutions and innovation Measures the capability and investment in technology solutions and ability to deliver value-added services (innovation) with high technology leverage 1 Measured through responses from referenced buyers for each service provider Source: Everest Group (2015) Delivery footprint Measures the delivery footprint across regions and the global sourcing mix Buyer satisfaction Measures the satisfaction levels 1 of buyers across: Business driver Implementation Process expertise Relationship management 12
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 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
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 (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 14
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