Mortgage BPO – Service Provider Landscape with Services PEAK … · In this research, we analyze...

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EGR-2017-11-R-2444

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Mortgage BPO – Service Provider Landscape withServices PEAK Matrix™ Assessment 2017

Banking and Financial Services (BFS) – Business Process Outsourcing (BPO)Market Report – December 2017

2Copyright © 2017, Everest Global, Inc.EGR-2017-11-R-2444

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Table of contents

Background and methodology 5

Executive summary 10 Summary of key messages 11

Section I: Everest Group Services PEAK Matrix™ for mortgage BPO 13 Summary 14 Mortgage BPO Services PEAK Matrix 18 Assessment of service providers 19 Mortgage BPO Star Performers 2017 23

Section II: Analysis of service providers’ market shares 24 Summary 25 Market success (revenue, clients, service line growth) 26 Market share by lines of businesses 28 Market share by geography 29

Section III: Service provider comments 30 Everest Group’s remarks on service providers 31

Appendix 47 Glossary of key terms 48 BFS BPO research calendar 50 References 51

Topic Page no.


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Our research methodology is based on four pillars of strength to produce actionable and insightful research for the industry

Market thought leadership Actionable and insightful research Syndicated and custom research deliverables

Proprietary contractual database of ~400 mortgage BPO contracts (updated annually) Year-round tracking of 15+ mortgage BPO service providers Large repository of existing research in mortgage BPO Dedicated team for mortgage BPO research, spread over two continents Over 20 years’ experience of advising clients on mortgage BPO-related decisions Executive-level relationships with buyers, service providers, technology providers, and industry associations

Robust definitions and frameworks(BFSI segmentation, third-party Business Process Outsourcing (BPO) market definition, PEAK Matrix, and market maturity)

Primary sources of information(Annual contractual and operational RFIs, service provider briefings, buyer interviews, and web-based surveys)

Diverse set of market touch points(Ongoing interactions across key stakeholders, inputs from a mix of perspectives and interests, supports both data analysis and thought leadership)

Fact-based research(Data-driven analysis with expert perspectives, trend-analysis across market adoption, contracting, and service providers)

Services Industry

Service Enablers

Service ProvidersEnterprises

1 2 3 4


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Background and methodology of the research

Background of the researchMortgage BPO stands out as one of the largest submarkets within banking BPO. As regulatory bodies continue to increase their oversight on mortgage activities of banks, the role of BPO has been gaining more significance in the mortgage landscape. This, coupled with newer entrants in the space, such as small-sized banks that lack cost-effective internal capabilities, is also causing a spike in the demand for mortgage BPO.While the origination volumes have witnessed a decline, the cost of providing origination and servicing has been on the rise.Buyers are now looking to service providers to deliver more than just cost savings. The following features are increasingly gaining prominence: Risk and regulatory compliance solutions to prevent banks from faltering Digital mortgage services as an increasing number of customers, especially the millennials, now prefer to apply for loans

online due to the ease of access across channels and user-friendly features Service providers need to up their game due to a host of challenges in the market. With a progressively changing landscape, service providers will be required to make the right set of investments such as digitization of mortgage processes and risk and compliance tools to stay competitive. At the same time, buyers need to identify the providers who can deliver an impact on the costs and enhance the customer loyalty with the technology solutions and risk management tools that they have to offer. The ever-increasing adoption of technology witnessed several service providers join the party, shifting their focus from core mortgage offerings to Robotic Process Automation (RPA) and cognitive automation. While some of the leading providers tried to tap into the automation market by developing their in-house automation capabilities and investing in next-generation cognitive automation technologies, others tried to make the most of the RPA opportunity by partnering/collaborating with RPA technologyproviders.

Scope and methodologyIn this research, we analyze the global mortgage BPO service provider landscape. We focus on: Relative positioning of 16 service providers on Everest Group’s Services PEAK Matrix™ for mortgage BPO Analysis of service providers’ market share and service provider comments


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This report is based on various key sources of proprietary information

1 Assessment for Capgemini, DXC Technology, EXL, and IBM excludes service provider inputs on this particular study, and is based on Everest Group’s estimates that leverage Everest Group’s proprietary Transaction Intelligence (TI) database, ongoing coverage, service provider public disclosures, and interaction with buyers

2 An Mphasis companyNote: We continually monitor the market and update the above list to include emerging service providers

Confidentiality: Everest Group takes its confidentiality pledge very seriously. Any contract-specific information collected, will only be presented back to the industry in an aggregated fashion

List of service providers covered in the analysis1

Proprietary database of 15+ mortgage BPO service providers (updated annually) The database tracks the following for each service provider:

– Revenue and number of FTEs– Number of clients – FTE split by different processes– Revenue split by region – Location and size of delivery centers– Technology solutions developed

Proprietary database of ~400 mortgage BPO contracts (updated annually) The database tracks the following elements of each contract:

– Buyer details including size and signing region– Contract details including service provider, contract type, TCV & ACV, service provider

FTEs, start & end dates, duration, and delivery locations – Scope details including share of individual buyer locations being served in each

contract, Line of Business (LOB) served, and pricing model employed

Service provider briefings– Vision and strategy– Annual performance and future outlook– Key strengths and improvement areas– Emerging areas of investment

Ongoing buyer surveys and interactions– Drivers and challenges for adopting mortgage BPO – Detailed assessment of service provider performance– Emerging priorities – Lessons learnt and best practices

2

2

1

3

4


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Everest Group’s classification of the BFSI industry

Retail financial services (B2C1)– Retail banking– Lending– Cards

Commercial banking (B2B2)

Banking

Investment banking

Asset management

Custody & fund administration

Brokerage

Capital markets

Property insurance

Casualty insurance

Reinsurance

Others

P&C insurance

Banking, Financial Services, and Insurance (BFSI)

Life insurance

Pensions and annuities

Reinsurance

Others

L&P insurance

1 Business to consumer2 Business to business


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Everest Group’s classification of the mortgage value chain

Analytics

Regulatory compliance and reporting

Origination Servicing

Defaultmanagement

Refinance / loan modification

Short sale / foreclosure

Credit/collateral evaluation

Credit risk assessment

Fraud risk assessment

Documentverification

Rate locking

Sourcing

Lead generation

Applicationmanagement

Loan pricing

Loan document indexing and verification

Underwriting

Collateral risk underwriting

Underwritingdecision

Underwritingaudit

Riskmanagement

Securitizationsupport

Loan setup

Payment processing

Collections

Credit reviews

Collateral review

Post funding review

Loan funding

Document draw

Condition clearing and validation

Wire request and approval

Post closure document review

Purchase review and approval

Compliance/post closure

compliance1

Securitization support

ProcessingAccount closure /

foreclosure

Securitization

Pre-securitization

Core securitization

Quality assurance Risk management

Document support

Regulatory compliance

1 The United States compliance follows the mortgage electronic registration system and the HUD1 settlement statementNote: 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


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Multiple operating-model alternativesThe alternatives range from internal shared services, Global In-house Centers (GICs) to third-party outsourcing. This report focuses on third-party models

There are also many variants that exist in the industry (e.g., vendor-managed GICs) and some companies choose a “hybrid” approach, adopting a combination of internal and third-party-based models.

Build Operate Transfer (BOT) Typically service provider-owned; can

be transferred back to the customer Sometimes customer-owned; typically

for new markets

Services Use of an external service provider for

business/IT services Includes providing services from

service provider-owned facilities or from co-owned or subcontracted ones

Shared services model Internal onshore service delivery

organization leveraging scale and centralization

Alliance-based models

Joint Venture (JV) Joint ownership with the provider Typically, the outsourcing partner

provides the implementation and initial operational support

Depending on the initial arrangement and progress of relationship, the ownership structure may change with time

May include revenue generation / sharing objectives

Offshore outsourcing Use of an offshore-based external

service provider to outsource business/IT services

Includes outsourcing to a domestic provider, who in turn has offshore-based centers or subcontracts to an offshore-based provider

Services (third-party) modelsRetained and optimized models

GIC model Internal offshore service delivery

organization leveraging scale, centralization, and labor arbitrage

Operating model alternatives Focus of this report


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Contents

Executive summary

Everest Group Services PEAK Matrix™ for mortgage BPO

Analysis of service providers’ market shares

Service provider comments

Appendix


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Everest Group classifies 16 mortgage BPO service providers on the Everest Group Services PEAK Matrix into three categories of Leaders, Major Contenders, and Aspirants

– Accenture and TCS are the Leaders– Major Contenders include HCL, Genpact,

Infosys, Firstsource, Cognizant, Mphasis-Digital Risk, IBM, Sutherland, Wipro, WNS, and Capgemini

– EXL, Intelenet, and DXC Technology are the Aspirants on the Services PEAK Matrix for mortgage BPO

Cognizant, HCL, and TCS are identified as the “Star Performers” on the mortgage BPO Services PEAK Matrix for 2017, based on their strong performance during the period between 2016-2017

The landscape for mortgage BPO is becoming increasingly competitive, as service providers continue to evolve their capabilities and gain market share by capitalizing on growing trends such as RPA

Summary of key messages (page 1 of 2)

Everest Group Services PEAK Matrix™ for Mortgage BPO

Leaders Major Contenders Aspirants Star Performers

Everest Group Mortgage BPO – Service Provider Landscape with Services PEAK Matrix™

Mortgage BPO vision & capability(Vision & strategy, scope of services offered, innovation & investments, and delivery footprint)

Mar

ket i

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ct(M

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High

Low

Low High

AccentureTCS

HCL

Genpact

Sutherland

Wipro

InfosysIBM

Mphasis-Digital Risk Firstsource

Cognizant

DXC Technology

Intelenet

EXLWNS

Capgemini

Aspirants

LeadersMajor Contenders


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Accenture, TCS, and Mphasis-Digital Risk are the three largest mortgage BPO service providers by revenue, whereas Accenture, Wipro, and Mphasis-Digital Risk have the largest number of clients

Accenture, TCS, and Firstsource together account for over 55% of the total growth (2016-2017) of the mortgage BPO market by revenue

HCL and Accenture each witnessed a Year-on-Year (YOY) growth of over 25% by revenue

TCS has a dominating presence across all mortgage BPO processes – Originations see the highest competitive intensity among all mortgage processes, while servicing is dominated by two

players – TCS and Cognizant

North America remains the largest buyer geography for mortgage BPO by revenue and continues to grow at a stable rate– The United Kingdom and Asia Pacific (majorly driven by the mortgage market in Australia) are the two emerging

geographies in the mortgage market

Key insights on mortgage BPO service providers’ market shares1

Summary of key messages (page 2 of 2)

1 Based on the data of 16 mortgage BPO service providers


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Contents

Executive summary




Appendix


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Everest Group Services PEAK Matrix™ for mortgage BPO Summary

Everest Group classifies 16 mortgage BPO service providers on the Everest Group Services PEAK Matrix into the three categories of Leaders, Major Contenders, and Aspirants. The Services PEAK Matrix is a framework to assess the absolute market success and overall capability of service providers– Leaders: There are two service providers in the Leaders category – TCS and Accenture– Major Contenders: The Major Contenders category has 11 service providers – HCL, Genpact, Infosys, Firstsource,

Cognizant, Mphasis-Digital Risk, IBM, Sutherland, Wipro, WNS, and Capgemini– Aspirants: EXL, Intelenet, and DXC Technology are the Aspirants on the Services PEAK Matrix for mortgage BPO

Everest Group conferred the “Star Performers” title on providers that demonstrated the strongest forward and upward movement (2016-2017) on the Services PEAK Matrix– Cognizant, HCL, and TCS are the “Star Performers” on the mortgage BPO Everest Group Services PEAK Matrix for 2017


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Everest Group PEAK Matrix

Vision & capability(Vision & strategy, scope of services offered, innovation & investments, and delivery footprint)

High

LowLow High

Leaders

Aspirants

Mar

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Everest Group PEAK Matrix™ is a proprietary framework for assessment of market impact and vision & capability

Major Contenders


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Services PEAK Matrix™ evaluation dimensions

Measures impact created in the market –captured through three subdimensions

Mar

ket I

mpa

ct Major Contenders

Leaders

Aspirants

Measures ability to deliver services successfully.This is captured through four subdimensions

Vision for the client and itself; future roadmap and strategy

Vision and strategy

Depth and breadth of services portfolio across service sub-

segments / processes

Scope of services offered

Delivery footprint and global sourcing mix

Delivery footprint

Innovation and investment in the enabling areas, e.g.,

technology IP, industry/domain knowledge, innovative commercial constructs,

alliances, M&A, etc.

Innovation and investments

No. of clients, revenue base, and YOY growth, deal value/volume

Market adoption

Diversity of client/revenue base across industries, geos,

enterprise size class

Portfolio mix

Value delivered to the client based on customer feedback

and other measures

Value delivered

Vision & capability


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Everest Group confers the Star Performers title on providers that demonstrate the most improvement over time on the PEAK Matrix™

This slide to be used ONLY for “Star Performers”Star Performers are identified by top quartile performance improvement on the X and Y axes for each segment

MethodologyEverest Group selects Star Performers based on the relative YOY improvement on the PEAK Matrix

Year 1

Year 0

Mar

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mpa

ct

Vision & capabilityWe identify the service providers whose improvement ranks in the top quartile and award the Star Performer rating to those service providers with: The maximum number of top-quartile performance

improvements across all of the above parametersAND

At least one area of top-quartile improvement performance in both market success and capability advancement

The Star Performers title relates to YOY performance for a given service provider and does not reflect the overall market leadership position, which is identified as Leader, Major Contender, or Aspirant.

In order to assess advances on market impact, we evaluate each service provider’s performance across a number of parameters including: Yearly ACV/YOY revenue growth # of new contract signings and extensions Value of new contract signings Improvement in portfolio mix Improvement in value delivered

In order to assess advances on vision andcapability, we evaluate each service provider’s performance across a number of parameters including: Innovation Increase in scope of services offered Expansion of delivery footprint Technology/domain specific investments

ILLUSTRATIVE EXAMPLE FOR SERVICES PEAK MATRIX


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* Service providers scored using Everest Group’s proprietary scoring methodology given on page 16 and 17Note: Assessment for Capgemini, DXC Technology, EXL, and IBM excludes service provider inputs on this particular study, and is based on Everest Group’s

estimates which leverage Everest Group’s proprietary Transaction Intelligence (TI) database, ongoing coverage, service provider public disclosures, and interaction with buyers

Source: Everest Group (2017)

Everest Group Services PEAK Matrix™Mortgage BPO – Service Provider Landscape with Services PEAK Matrix Assessment 2017Everest Group Mortgage BPO – Service Provider Landscape with Services PEAK Matrix™*

Mortgage BPO vision & capability(Vision & strategy, scope of services offered, innovation & investments, and delivery footprint)

Mar

ket i

mpa

ct(M

arke

t ado

ptio

n, p

ortfo

lio m

ix, a

nd v

alue

del

iver

ed)

High

LowLow High

AccentureTCS

HCL

Genpact

Sutherland

Wipro

InfosysIBM

Mphasis-Digital Risk Firstsource

Cognizant

DXC Technology

IntelenetEXL

WNSCapgemini

Aspirants

LeadersMajor Contenders LeadersMajor ContendersAspirantsStar Performers


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1 Value delivered score and overall PEAK matrix positioning adversely impacted for those service providers who did not provide adequate information

Service provider

Market impact Vision & capability

Market adoption

Portfolio mix

Value delivered1 Overall


Innovation and

investmentsDelivery footprint

Vision and strategy Overall

Accenture

TCS

Measure of capability: Best-in-class Very high High Medium high Medium Medium low Low Not mature

Summary dashboard | Delivery capability and market success assessment of providers for mortgage BPO 2017Leaders


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Service provider


Market adoption

Portfolio mix



Innovation and



Capgemini

Cognizant

Mphasis-Digital Risk

Firstsource

Genpact

HCL

IBM

Infosys

Sutherland


Summary dashboard | Delivery capability and market success assessment of providers for mortgage BPO 2017Major Contenders


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Service provider


Market adoption

Portfolio mix



Innovation and



Wipro

WNS


Summary dashboard | Delivery capability and market success assessment of providers for mortgage BPO 2017Major Contenders


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Service provider


Market adoption

Portfolio mix



Innovation and



DXC Technology

EXL

Intelenet


Summary dashboard | Delivery capability and market success assessment of providers for mortgage BPO 2017Aspirants


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Mortgage BPO Star Performers 2017Distinguishing features

Mortgage BPOStar Performers 2017

Distinguishing features in market impactin 2017

Distinguishing features in vision & capability enhancements in 2017

Star Performers 2017

Signed new clients with a higher deal value by offering a technology component, such as analytics and cognitive intelligence capabilities, in the contracts

Expanded its revenue base as a result and increased its market share in the North American market

Invested in enhancing its technology capabilities and launched new augmentation solutions and risk & regulatory management tools (such as Tcube) to strengthen its value proposition to clients

Ramped up its FTE strength to provide enhanced onshore support for originations and added new offshore centers

Significantly expanded scale and existing capabilities by getting more clients and contracts on board through the acquisition of Urban Fulfillment Services

Consequently, registered the highest growth rate in the mortgage BPO market for 2017 due to its inorganic expansion

Improved FTE strength inorganically to cater to the originations and servicing market

Enhanced its ability by partnering with technology vendors, such as automation and analytics solution providers, to provide its clients sophisticated technology-based offerings and better serve their needs

Focused on in-house development and partnering with technology players (such as iReply) for providing technology capabilities in high growth areas such as analytics, risk & regulatory compliance, and automation

Successfully maintained a balance of onshore and offshore FTEs to cater to the changing market demand of originations and servicing capabilities

Added new clients to its large portfolio and successfully ramped up its existing relationships in a market where other providers have struggled to do the same

Amongst the top three players to contribute to the overall growth of the mortgage BPO market


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Contents

Executive summary




Appendix


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Analysis of service providers’ market sharesSummary

1 Based on the data of 16 mortgage BPO service providers

We analyzed the overall mortgage BPO market shares of service providers along various parameters1

Mortgage BPO revenue: Accenture, TCS, and Mphasis-Digital Risk were the top three mortgage BPO service providers by revenue

Number of clients: Accenture, Mphasis-Digital Risk, and Wipro accounted for more than 55% of mortgage BPO clients

YOY growth: HCL and Firstsource witnessed a service line growth of over 25% by revenue

Mortgage BPO market growth contribution: Accenture, TCS, and Firstsource together accounted for over 55% of the total growth (2016-2017) of the mortgage BPO market by revenue

Mortgage BPO processes: TCS has a dominating presence across all the mortgage BPO processes – Originations see the highest competitive intensity among all the mortgage processes, while servicing is dominated by

two players – TCS and Cognizant

Buyer geography: North America remains the largest buyer geography for mortgage BPO by revenue and continues to grow at a stable rate– The United Kingdom and Asia Pacific (majorly driven by the mortgage market in Australia) are the two emerging

geographies in the mortgage market


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Accenture is the largest mortgage BPO provider by revenue and is dominant in terms of the size of its portfolio

Sample size: Based on the data of 16 mortgage BPO service providersSource: Everest Group (2017)

>20%

<5%

<5%

<5%

<5%

<5%

<5%

<5%

<5%

<5%

<5%

By revenue By number of clients

Accenture>20%

<5%

<5%

<5%

<5%

<5%

<5%

<5%

Global mortgage BPO provider market share Growth of mortgage BPO revenueYOY growth in percentage

>20%

<5%

15-20%

5-15%

Capgemini

Cognizant

EXL

Firstsource

HCL

Genpact

DXC Technology

IBM

Infosys

IntelenetMphasis-

Digital RiskSutherland

Wipro

TCS

WNS

5-15%

5-15%

5-15%

5-15%

5-15%

5-15%

5-15%

15-20%

5-15%

5-15%

15-20%

5-15%

5-15%


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HCL accounted for the largest share of mortgage BPO growth by revenue and contributed significantly to the growth in the client base along with Mphasis-Digital Risk and Firstsource

1 Absolute revenue growth figure does not include the service providers with a negative growthSample size: Based on the data of 16 mortgage BPO service providers

Source: Everest Group (2017)

Service provider share of 2017 YOY growth in mortgage BPOBy number of clients

Service provider share of 2017 YOY growth in mortgage BPOBy revenue in US$ million

15%

2%

25%

30%

100% = 120-1501 100% = 25-50

10%

5%

20%


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Market share by mortgage BPO process Number of FTEs in ‘00s

TCS is amongst the top three players in all the three mortgage processes, while Accenture dominates the originations and servicing markets

The servicing process has witnessed intensifying competition, as service providers ramp up their servicing capabilities due to the declining originations market

TCS is amongst the top three players in all the three mortgage processes due to its well diversified scope and high scale of services

The next tier of players in originations, servicing, and securitization processes will have to aggressively increase their market share to pose a challenge to the incumbents

15%

24%

34%

16%

11%Firstsource

Mphasis-Digital Risk

Others

100% =20-30

Securitization and others

TCS

Wipro


14%

27%

7%6%20%

26%

Servicing

TCS

Others

Intelenet

Cognizant

100% = 150-200

Accenture

SGS

Genpact

9%6%

8%

29%18%

6%

24%

Originations

Intelenet

OthersFirstsource

TCS

100% = 100-150

Accenture

Infosys


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TCS is amongst the top three players in North America and the United Kingdom, while Genpact dominates the Asia Pacific regionMortgage BPO market share by signing regionsRevenue in US$ million

Asia Pacific

69%

24%

7%Others

WNS

100% = 360-380

Genpact

United Kingdom

41%

24%

19%

16% FirstsourceOthers

100% = 30-50

TCS

Intelenet

North America

24%

14%

15%6%6%

35%

100% = 900-1,000

Others

TCS

Cognizant

Accenture

Mphasis-Digital RiskWipro


North America is the most competitive market. Accenture, TCS, and Mphasis-Digital Risk account for more than 50% of the North American market

The United Kingdom and Asia Pacific are the two emerging geographies in the mortgage BPO market, dominated by Firstsource and Genpact respectively


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Contents

Executive summary




Appendix


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AccentureEverest Group assessment – Leader


Market adoption Portfolio mix



Innovation and




Strengths Areas of improvement

Accenture has a robust strategy for developing digital and end-to-end offerings for clients in addition to traditional BPO services

It has invested in advanced analytics solutions over the last few years, which has positioned it to offer an enhanced customer experience to clients

It has also ramped up its technology capabilities inorganically with platform, augmentation, and tie-and-run solutions, which helps it to provide end-to-end solutions to clients looking for judgment-intensive mortgage service

Accenture can further develop its risk management and regulatory compliance capabilities, given the increasing complexity of regulations in the United States

It needs to ramp up its servicing capabilities to provide end-to-end services in this space, especially since the market demand for servicing capability is on the rise

There is scope to more effectively operationalize its vision in order to embed outcome-based pricing models such as gainsharing in its deals



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TCSEverest Group assessment – Leader





Innovation and





TCS has a taken a step toward integrating its IT and BPO functions. This is expected to enhance its problem-solving by positioning itself as an integrated solutions provider to clients

TCS has continued to be a Leader on the Services PEAK Matrix, with sustained growth in the mortgage BPO market due to its well-diversified scope of services

It has significant technology capabilities with focused offerings and investments in high growth areas such as analytics, risk & regulatory compliance, and automation

TCS can leverage its onshore delivery capabilities to expand the judgment-intensive services such as collateral risk underwriting and underwriting decision services

While it has invested in developing its RPA capabilities, it should also proactively improve its traction among clients to cement its position as a Leader. This will help it to create a sustainable competitive advantage in the market

Clients suggest that TCS can improve on flexibility and delivery of mortgage services



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CapgeminiEverest Group assessment – Major Contender





Innovation and





Capgemini has a high focus on Banking and Financial Services, which provides it access to a wide portfolio of clients

It follows a consulting-led engagement model, which gives it an advantage of enhanced problem-solving ability for clients

It has made investments in technology by partnering with third-party providers for capabilities such as automation and analytics to cater to the existing demand in the market

Its client portfolio is focused more toward large-sized clients. It needs to diversify its portfolio to cater to the increasing number of small-sized clients that enter the market for mortgage BPO services

It needs to broaden its portfolio of services further and provide more judgment-intensive services in order to establish a differentiator and ensure a stronger relationship with its buyers



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CognizantEverest Group assessment – Major Contender





Innovation and





Cognizant continues to witness healthy growth in the mortgage BPO revenue by ramping up its origination capabilities and signing more deals with small-sized buyers

Its continual investments in technology, such as automation and other digital solutions, over the last few years have allowed it to offer a technology component in its deals, leading to higher contract value. This might allow it to drive future growth

Cognizant’s strategy to partner with third-party technology players to provide integrated solutions has helped it in satisfying its clients’ existing needs

The originations market is currently slow, which provides a window of opportunity to Cognizant to develop its origination capabilities. It can leverage these capabilities to offer end-to-end mortgage BPO services to clients when the market rebounds

It should also augment its onshore capabilities to be able to deliver value-added services such as underwriting capability to clients

Cognizant has a host of technology capabilities in analytics and automation. It can improve its revenue pool by adding more large-sized buyers to the contracts that demand these capabilities



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Mphasis-Digital RiskEverest Group assessment – Major Contender





Innovation and





Mphasis-Digital Risk has a robust strategy of adapting to the existing market demand. It has shifted gears from QA/QC services to focus more on digital innovation to meet client requirements and compete in the market

It has invested in technology capabilities including analytics solutions to provide an enhanced customer experience throughout the customer lifecycle

It has differentiated its model from that of competitors by developing judgment-intensive service capabilities at offshore locations as well. This has enabled it to deliver further cost advantage to clients

Mphasis-Digital Risk had some volatility in its business due to the QA/QC portfolio. It can focus on improving the percentage of annuity contracts in its portfolio to improve its revenue pool and avoid losing out on growth opportunities

Mphasis-Digital Risk should also expand its mortgage process coverage in servicing since the origination volumes have witnessed a decline, especially in the North American market

It can optimize the onshore centers by consolidating them or ramping up their existing FTE strength, as they aim to pivot away from QA/QC work



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FirstsourceEverest Group assessment – Major Contender





Innovation and





Through its acquisition of ISGN Solutions, Firstsource has ramped up its capabilities in the mortgage BPO market and has witnessed significant growth over the last year

Firstsource is able to blend a strong offshoring leverage with significant onshore presence for delivering more judgment-oriented processes

Clients appreciate its flexibility to ramp up quickly and its proactiveness in improving the client’s processes

It can focus on diversifying its client portfolio by adding medium- and large-sized clients in the mortgage market to improve the average contract value

It has a unique positioning in the United Kingdom market. Therefore, it can expand its capabilities to add more deals to its portfolio and scale up its business there

Firstsource needs to focus its efforts on building a robust technology layer to complement its traditional BPO offerings in order to stay competitive in the market



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GenpactEverest Group assessment – Major Contender





Innovation and





Genpact has a strong presence in the North America and Asia Pacific regions, which enables it to cater to small-, medium-, and large-sized clients across these markets

Its strategy of developing risk and compliance management solutions has enabled it to differentiate itself from competition in the market

Over the last few years, it has proactively invested in onshore capabilities to cater to the rising demand of judgment-intensive processes such as underwriting

Genpact’s capabilities are currently focused more on originations. It can augment its capabilities in the servicing domain to reduce the volatility in the business as originations volume decreases

It can partner with third-party providers for mortgage platforms and technology solutions to tap into small-sized clients that generally require these solutions

Clients suggest that with varying volumes of work, Genpact can be more flexible in ramping up its mortgage services capabilities



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HCLEverest Group assessment – Major Contender





Innovation and





HCL has significantly scaled up its mortgage capabilities with the acquisition of Urban Fulfilment Services

It has made significant investments to develop more advanced capabilities in the emerging areas of automation and machine learning by partnering with technology vendors

It has a unique position of being able to deliver end-to-end in-house mortgage servicing capabilities in the market

While HCL has end-to-end servicing capabilities, it needs to tap into more clients with a servicing component in the contract

It can leverage its presence at onshore locations to cater to more judgment-oriented services, such as regulatory reporting and risk management, as the demand for these services is on the rise in the market



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IBMEverest Group assessment – Major Contender





Innovation and





IBM has made several investments in technology capabilities such as RPA, cognitive intelligence, and analytics

Its portfolio is focused primarily on servicing, which provides an opportunity to grow in the market as it has a higher offshore FTE strength and origination contract volumes are down

Although IBM has invested in technology capabilities such as advanced analytics tools, it has not made any significant mortgage-specific investments to grow in the market

IBM needs to improve its sales efforts for contract price negotiation and account planning to improve the average value for its contracts



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InfosysEverest Group assessment – Major Contender





Innovation and





Infosys has leveraged its wider presence in the banking market to develop a good spread of mortgage portfolio across multiple geographies, notably North America, Europe, and Asia Pacific. This has helped it to grow its revenue at a robust pace in 2017

It has developed a strong servicing portfolio that has led to significant growth, as the mortgage servicing market is more active as compared to the originations market

Infosys has an extensive offshore presence, which has enabled it to provide labor arbitrage for traditional BPO services. Clients suggest that the consistency in the delivery of mortgage services has developed a stickiness towards it, leading to long-term relationships

Infosys needs to define a robust strategy in the market to build on its existing capabilities in order to be competitive. It can leverage its existing client relationships with banks to cross-sell mortgage BPO work once it ramps up its capabilities

The demand for regulatory compliance tools is high due to the complex regulatory environment in the United States. Therefore, lack of these capabilities may cause a hindrance in getting new deals, especially as other service providers enhance their risk and regulatory compliance capabilities

It can develop judgment-intensive service capabilities in areas such as core securitization and underwriting, as the market seeks to attain cost efficiency with automation and other technologies



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SutherlandEverest Group assessment – Major Contender





Innovation and





With a well-diversified scope and a strong delivery model, Sutherland Global Services is a Major Contender on the Services PEAK Matrix

They have started making investments in technology capabilities such as analytics and automation to stay competitive in the market

They have a good domain expertise and hence customers appreciate them for their proactiveness and ability to handle issues and escalations in the services they provide

Sutherland Global Services needs to secure mindshare with buyers to be able to add more deals to its portfolio

As it has started investing in technology solutions, it can focus its efforts on deals with medium- and large-sized clients, which often require a higher proportion of complex services such as core underwriting

It should also look to ramp up its servicing capabilities, especially due to the unstable nature of the originations business



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WiproEverest Group assessment – Major Contender





Innovation and





Wipro has invested in technology capabilities to sell it as a bundled offering with BPaaS (Business Process-as-a-Service) to clients

Its delivery mix makes judicious use of offshore FTEs to reap labor arbitrage benefits as well as a significant proportion of onshore FTEs to deliver more complex services to its clients

It has low concentration risk due to the large number of clients in its portfolio

Although Wipro has invested in technology capabilities, it lacks end-to-end technology solutions, leading to limited traction of these capabilities

Several factors pose a threat to its business:

– Due to a higher component of QA/QC work, Wipro has limited annuity-based contracts, resulting in an unstable revenue stream

– Its portfolio is primarily focused on originations. The business is therefore likely to be under pressure, especially as origination volumes witness a decline in the North American market



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WNSEverest Group assessment – Major Contender





Innovation and





WNS has a balanced portfolio of services across mortgage processes, which allows it to have a stable revenue stream

It has delivery centers across low-cost tier-2 and tier-3 cities in India, which gives it a cost advantage in its operations

Since it has a traditional BPO legacy, it has proactively made investments in technology solutions such as analytics and automation by partnering with technology vendors

WNS’ acquisition of Denali Sourcing Services has provided access to a wider banking clientele, enabling it to leverage these clients for its mortgage portfolio

WNS can focus on building onshore capabilities to provide judgment-intensive services, especially as more buyers look for value-added services

WNS can market its existing mortgage capabilities to improve the proportion of small-sized clients in its portfolio, which can help to improve its revenue stream

Clients have said that WNS can improve in ramping up its value-added services and can be more proactive in improving process efficiencies



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DXC TechnologyEverest Group assessment – Aspirant





Innovation and





DXC’s core banking platform provides it an access to a larger pool of clients for mortgage services

It has an opportunity to leverage its capabilities for small-sized buyers as an increasing number of such buyers demand mortgage BPO services in the market

DXC needs to focus on building a strategy to maintain operational stability after the recent merger with CSC

Its capabilities are currently focused majorly on servicing. It may lose out on opportunities in the origination market when the origination volumes stabilize again

It can also invest in technologies such as RPA and analytics to have a higher deal value for its contracts



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EXLEverest Group assessment – Aspirant





Innovation and





EXL has developed strong analytics capabilities, which it can leverage to deliver improved customer experience

Its mortgage portfolio is primarily focused on servicing, which gives it an advantage in terms of a stable revenue stream, with any decline in the originations market

EXL has a very limited set of clients. It can leverage its access to banking clients to add more mortgage contracts and improve its revenue stream

It should also look to expand its onshore delivery capability to provide more complex value-added services to clients

It can work on developing strong technological capabilities to support core mortgage processes and add to its strong capabilities in analytics



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IntelenetEverest Group assessment – Aspirant





Innovation and





Intelenet has good front-office capabilities. This has helped it to differentiate itself in the market as it is one of the few players that can provide both front- and back-office capabilities

It has a strong understanding of the United Kingdom regulatory market, which has enabled it to achieve success in the market

Intelenet primarily has an offshore presence. It can leverage its cost advantage to get more deals in the mortgage market and expand its scale

It should also develop technology capabilities such as analytics and automation to improve the customer experience and deliver cost efficiency for clients’ processes

Intelenet can focus on investing in onshore capabilities to offer more value-added services such as core securitization to clients and meet their existing demand



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Contents

Executive summary




Appendix– Glossary of key terms– BFSI BPO research calendar– References


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Glossary of key terms used in this report (page 1 of 2)

Term Definition

ACV Annualized Contract Value is calculated by dividing the Total Contract Value (TCV) by the term of the contract

BFSI Banking, Financial Services, and Insurance industry

BPaaS Business Process as a Service

BPO Business Process Outsourcing refers to the purchase of one or more processes or functions from a company in the business of providing such services at large or as a third-party provider

BPSDA Business Process Service Delivery Automation

Buyer The company/entity that purchases outsourcing services from a provider of such services

FTE Full Time Employees on the rolls of the company

FTT Financial Transaction Tax

GIC Global In-house Center

Global sourcing/ offshoring Transferring business process activities or its complete ownership to a different country from the country (or countries) where the company receiving the services is located, is referred to as offshoring or global sourcing

GRC Governance, Risk, and Complaince

JV Joint Venture

LOB Line of Business


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Glossary of key terms used in this report (page 2 of 2)

Term Definition

Nearshore Nearshoring is the sourcing of service activities to a foreign, lower-wage country that is close in some dimension of distance

RPA Robotic Process Automation

SDA Service Delivery Automation

STP Straight Through Process

TCV Total Contract Value is the potential revenue associated with the contract and estimated at the commencement of the contract (e.g., sum total of revenue accrued to the service provider from the contract over the entire contract term, usually measured in millions of dollars)


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Banking BPO Annual Report 2017: Disruption Does Not Discriminate – Banks Exploring New Technologies to

Offset Existing Challenges September 2017

Capital Markets BPO Service Provider Landscape with PEAK™ Matrix Assessment September 2017

Banking BPO Service Provider Profile Compendium September 2017

Mortgage BPO – Service Provider Landscape with Services PEAK Matrix™ Assessment 2017 November 2017Capital Markets BPO Service Provider Profile Compendium Q1 2018

Banking BPO Service Provider Landscape with PEAK™ Matrix Assessment Q1 2018

Mortgage BPO – Service Provider Landscape with PEAKTM Matrix Assessment 2015 May 2015

Mortgage BPO State of Market Report 2015 – Curve of Time to Meet Mortgage Again? May 2015

Home Equity Loans – The Next Frontier in Mortgage BPO May 2015

Risk Management – Looking Beyond the Transactions, Credit Leading the Way April 2016

Retail Banking BPO – State of the Market with PEAK Matrix™ Assessment 2016 December 2016

Risk management – $300 Billion – Enough to Buy Facebook, or Pay for Your Regulatory Mistakes March 2017

Automation use cases in banking Q1 2018

Mortgage of the future viewpoint Q1 2018

Flagship BFS BPO reports Release date

Thematic BFS BPO reports Release date

Research calendar – Banking and Financial Services (BFS) –Business Process Outsourcing (BPO)

Note: For a list of all BFS BPO reports published by us, please refer to our website page

PlannedPublished Current release

https://www2.everestgrp.com/reports?Cat0=1085


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Additional BFS BPO research references

The following documents are recommended for additional insight into the topic covered in this report. The recommended documents either provide additional details on the topic or complementary content that may be of interest

1. $300 Billion – Enough to Buy Facebook, or Pay for Your Regulatory Mistakes (EGR-2017-11-V-2123); 2017. While risk management has been around for a long time, it is only in recent times, particularly in the aftermath of 2008 financial crisis, that it has emerged as a central topic of interest for banks, regulatory bodies, and the wider public. In this report, we focus on three categories of risk management – market, liquidity, and regulatory risk management, as well as the global sourcing landscape for them. Among the topics covered are the nuances of the global sourcing landscape for liquidity and market risk, and how banks should respond to a new regulation

2. Banking BPO Service Provider Profile Compendium 2017 (EGR-2017-11-R-2068); 2017. The banking BPO service provider profile compendium provides accurate, comprehensive, and fact-based snapshots of 17 service providers in the market. Each service provider profile captures a comprehensive picture of that provider’s service suite, scale of operations, technology solutions, risk management & regulatory reporting support, and delivery locations; along with Everest Group’s assessment of the provider. The compendium also sheds light on the global banking BPO service provider landscape

3. Retail Banking BPO – Service Provider Landscape with PEAK Matrix™ Assessment 2017 (EGR-2017-11-R-2208); 2017. This report assists key stakeholders (buyers, service providers, and technology providers) in understanding the changing dynamics of the retail BPO space and helps them identify the recent trends and future outlook. In this backdrop, the report provides comprehensive coverage of the global retail banking BPO space including detailed analysis of the state of the market, market trends and solution characteristics service provider landscape, and future outlook. It also includes a service provider profile compendium

4. Banking BPO Annual Report 2017: Disruption Does Not Discriminate – Banks Embracing Digital to Stay Relevant (EGR-2017-11-R-2320); 2017. This report assists key stakeholders (buyers, service providers, and technology providers) in understanding the changing dynamics in the banking BPO market and identifying recent trends and future outlook. In this backdrop, this report provides comprehensive coverage of the global banking BPO market including detailed analysis of market size & growth, buyer adoption trends, solution characteristics, and service provider landscape

For more information on this and other research published by Everest Group, please contact us:

Anupam Jain, Practice Director:Manu Aggarwal, Practice Director:Nikita Jindal, Senior Analyst:

[email protected]@[email protected]

Website: www.everestgrp.com | Phone: +1-214-451-3000 | Email: [email protected]

http://www2.everestgrp.com/reportaction/EGR-2017-11-V-2123/toc

http://www2.everestgrp.com/reportaction/EGR-2017-11-R-2068/toc

https://www2.everestgrp.com/reportaction/EGR-2017-11-R-2208/toc

https://www2.everestgrp.com/reportaction/EGR-2017-11-R-2320/toc




http://www.everestgrp.com/


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 empower clients to improve organizational efficiency, effectiveness, agility, and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at www.everestgrp.com.

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