Everest predicts strong Growth for application Outsourcing Service Providers



everestCapital market firms are responding to market challenges of low profit margins, regulatory compliance and aging systems by ramping up discretionary spending on technology. As a result, according to a recent report from the Everest Group, revenue growth for application outsourcing service providers is expected to register strong growth of 13 percent year-on-year through 2020.

Strained revenue growth, burgeoning costs due to litigations, and regulatory compliance continued to adversely affect the profitability of capital markets firms in 2013. This forced them to rethink and reinvent their business models as well as technological priorities.

As a result, 2013 saw strong return of discretionary spend – led by investments in development of specific applications and platform-based utilities for regulatory compliance, data management, risk management, and digital initiatives (cloud, analytics, and mobility).

Consequently, the service provider competitive landscape is also intensifying as service providers continue to ramp up their capabilities, invest in innovative technologies, form alliances, and acquire strategic targets to address the growing and complex technology needs of banks and financial institutions.

Capital markets AO overview:

  • IT spending for large capital markets firms witnessed a strong growth, driven by investments in technology for regulatory compliance and data management
  • North America gained market share in terms of number of transactions, while APAC’s share grew in terms of TCV. Europe declined on both metrics in 2013
  • Capital market firms with revenue in the range of US$5-10 billion witnessed a surge in spending as they strived for higher technological sophistication

October 6, 2014

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