Knowledgefaber Releases Latest Research Report On Top 25 Cities suitable for setting up Banking and Capital Market BPO

This report maps the performance of seventy five cities globally on well defined and varied parameters and provides ranking to these cities indicating their attractiveness for setting up of a BPO Service center. End Quote

(1888PressRelease) September 27, 2013 - Economic uncertainties in developed markets and in countries such as India and China have resulted in extreme volatility. As a result, financial institutions across the globe have been hunting for ways to reduce cost and outsourcing/off-shoring seems to be the option for them. However, this is not the single driver. Factors such as focus on risk mitigation, globalization and technological innovation are also driving banks to outsource their non core business processes.

Globally, banking and capital market industry vertical is the largest spender on business process management. They have a commendable share of about 19% in the global BPO spending. The current spending by banking and capital market process outsourcing is estimated at U.S. $33 bn. The spending is expected to grow at a CAGR of 7.3% over the next five years to reach a size of U.S. $47 bn by 2017.

While most financial services companies adopt hybrid sourcing models by leveraging third-party service providers, captives and shared services, the third party outsourcing is projected to grow the most (at 22% CAGR). This represents a tremendous opportunity for the third party service provider in coming years. These recent trends have brought in a huge demand for talent with specific banking and capital market domain knowledge. Knowledgefaber estimates that currently more than 450,000 professionals work specific to banking BPO globally and an additional 200,000 professionals would be needed over the next five years to ensure that the additional outsourcing needs are met by third party outsourcers.

However, outsourcing in the banking industry has seen a shift from being process specific to business specific. Previously, banking outsourcing generally included transaction processing, customer contact center, product development, sales and trading. However, recently the focus has been more on business which includes Retail banking, Mortgage banking, Corporate Banking, Investment banking, Asset management, Risk Management among others. A very good example of the same is that the Indian outsourcer Tata Consultancy Services (TCS) has seen its mortgage business revenue to increase by about 40% in the past two years. The firm has successfully added 2,000 staff to the existing 7,000 people working on mortgages. As a result outsourcing vendors need to increase their banking specific knowledge to cope with the increasing complexity of the outsourcing needs.

To add to this complexity, business margins in developed BPO destination have slowed down to modest margins of 15% of revenue today, as compared to as high as 40% of total revenue during the economic boom. Hence, for the outsourcing service providers, there will be no dearth of prospective clients; however only those service providers who can manage to hire relevant talent by lowering the total cost will be able to succeed.

These challenges have made it imperative for BPO firms to look at alternate destinations other than the traditional locations such as Tier I cities in India, China, Philippines and Canada. Some BPO firms have already made initial moves in this regard. For Example, Infosys BPO expanded its BPO operations in Lodz, Poland, and in Costa Rica; Genpact opened a new BPO center in Poland; and TCS expanded into Tier 3 Indian city of Indore. This has also started paying well for firms. Infosys has 25% of their staff outside India. But about 38% of their revenues come from outside of India through these international centers.

To make such informed decisions a firm needs to have a detailed understanding of three major drivers such as Talent Pool Availability; Cost of Business Operations and the Country's Business and Political Environment. Hence, Knowledgefaber came up with this report "Location Attractiveness" which helps business process outsourcing vendors make informed decision and expand in regions/cities where the talent pool is available and the operational costs are low which will result in higher operating margins.

The report examines the attractiveness of a city as an investment destination by analyzing various aspects including talent pool availability, quality of education, language capabilities, cultural affinity, compensation, attrition, competitive intensity, real estate cost, technology cost, and Macro Economic parameters such as political and economic stability, Infrastructure quality, competition intensity and security of Intellectual property. One of the key differentiating factors of this report is that we have collected actual field level and most updated data for all these parameters and for all the countries under consideration and then build the selection model using that data.

Also, in this report a sub-category list of factors specific to BFS functions outsourcing are devised to evaluate the location attractiveness and these are aligned with the above primary factors. Globally top 25 outsourcing countries and their key destinations/cities were identified and each of these cities was given a score for all sub-category list factors individually. Critical analysis of all the data at the sub category and business level was done and score was assigned to each of these sub-categories. Finally 25 cities in the scope were ranked according to the weighted score of all these sub-categories. Additionally, viewpoints of executives from BPO firms, Government agencies and subject matter expert are also included, enriching perspectives and providing first hand information on the growth potential of the respective country or region. Finally, once you purchase this report, later you will also have access (at a discounted rate) to an online interactive tool where an individual company can choose the weights themselves based on the relative importance of the different factors and can thereby get a dynamic choice of the locations.

Although cities of India and Philippines stay ahead in the race due to large sizable fresh talent pool and Banking relevant pool, cities such as Bangkok (Thailand), Jakarta (Indonesia), Rio de Janeiro (Brazil), and Sao Paulo (Brazil) have shown tremendous potential to become favorite destinations for Banking and Capital Markets BPO. The attrition in these cities is negligibly low when compared to attrition in Indian cities which are as high as 40%. Additionally, these countries are more politically and economically stable and have a sustainable ICT infrastructure, comparable to those of India and Philippines.

However, there might be a few concerns. One such concern is the ability to scale up a BPO operation in these countries. As it is a known fact that close to 40% of the work force in a BPO are fresher's, the ability of these countries to supply fresh graduates uninterruptedly would be put to test as these countries do not produce 7 million or 5 million graduates as China and India do.

Topics covered - Table of Contents (TOC)
i. Executive Summary
ii. Introduction to the report
iii. Current Scenario and Future of Global BPO Spending
iv. Changing landscape of Banking and Capital Markets Industry and its effect on Business Process Outsourcing
v. Current Scenario of third party BPO vendors
vi. Need for location centric strategies for Third Party Vendors
vii. Research Methodology: Location attractiveness factors, scoring and detailed working
viii. Ranking of top 25 cities globally based on 13 parameters
Detailed description of each city
ix. Conclusion and Recommendation for a BPO firm on location attractiveness for setting up a Banking and Capital Markets BPO
x. Reference List and Appendix

Tables and Charts
i. Global BPO Spending Size Split by Industry Vertical, Region, Functions (2012)
ii. Growth of global BPO Spending (2012 to 2017)
iii. Global BPO Spending Size Split by Industry Vertical, Region, Functions (2017)
iv. Banking and Capital Markets BPO Spending split by Process, Regions (2012)
v. Banking and Capital Markets BPO Spending split by Process, Regions (2017)
vi. Ranking of top 25 cities suitable for setting up a Banking BPO center

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