According to Kalpesh Master, managing partner at SunGard Global Services, financial institutions and other corporations are looking towards trusted outsourcing providers to obtain managed services. This is due to the increasing regulations and cost pressures on these firms.
These trends in outsourcing and managed services in 2013 will be increasingly seen in back-office functions, record-keeping for retirement plan, tax processing and actuarial modeling.
The firms can thus obtain cost savings derived from the domain expertise, quality and economies of scale of the service providers. They can also focus on their core business areas which contribute towards revenue generations.
Rodney Nelsestuen who is senior research director at CEB TowerGroup said that the financial institutions would increase spending on outsourcing at more that twice the rate of onsite IT spending till 2015. The main drivers of such growth trends in outsourcing and managed services in 2013 would be:
- The requirement for updated technology.
- Innovations from the vendor side in terms of pricing and delivery of services.
- The hiked business value offered by the vendors due to their domain expertise.
Trends in outsourcing and managed services
SunGard has come out with ten trends in the outsourcing and managing services for financial services industry that would be observed in 2013.
- Firms will see service providers as partners in order to obtain a more complete solution that will consist of a bundle of software, professional services, managed services, custom application development and thought-leadership.
- Software-as a-Service (SaaS) will continue to be sought by firms so that a customized and single solution can be created in the cloud.
- BPaaS (Business Process-as-a-Service) will also gain momentum which will allow firms to zero in on a utility model that can be used by several firms and thus provide economies of scale as well as provide efficient business process.
- Traditional staff augmentation and application hosting as well as replacement models will not be the only services that customer’s of BPO services look for. They will demand thought leadership and domain-specific business services.
- Service providers utilizing cloud computing will be in demand as they will be able to prototype as well as develop applications very quickly.
- In order to reduce the cost as well as free the internal resources, IT executives will be outsourcing IT application and infrastructure management services.
- Firms will take a closer look at the integrity of service providers and draw up strong Service Level Agreements so as to ensure compliance with operational and regulatory risk requirements.
- Service providers will stick to global standards and best practices and adopt certifications such as ITIL, Lean Six Sigma and COPC to offer high quality services to their customers.
- The firms will adopt a shift towards entering contracts with service providers on a variable cost model which will result in sharing of the risks. This helps save money and caters to the existing demand.
- Firms will rely on managed services providers in order to deal with the complex and relatively new initiatives such as smart grid and big data.
These trends in outsourcing and managed services for financial services industry show that operations and technology will be increasingly integrated. Software will be embedded in infrastructure and then bundled with managed services. These offerings will be provided via cloud or other platform-based BPO (Business Process Outsourcing).