Indian IT Services Firms and Financial Core System Development

January 11, 2007

Abstract

Bangalore, India 29 January 2007


Celent provides advice to financial services firms considering outsourcing core IT systems development to Indian IT vendors.

Indian IT vendors have been at the vanguard of IT outsourcing. However, their main competitive advantage of cost is fast eroding due to the expansion of global service vendors like IBM, Accenture, HP, etc. into India and other low cost countries, and from the newer low cost offshore locations.

Indian IT service vendors have been credited with perfecting the global service delivery process, have served more than half of the top 20 global financial firms, and have played a leadership role in the maturity of the overall global offshore industry. Lack of deep domain expertise in the financial industry meant that they competed mostly for the lower end (in terms of billing rates and services provided) of outsourced IT services during much of the earlier years. Despite this, the vendors experienced high growth, leveraging low costs, high quality execution, technological expertise, and superior process-oriented methodologies.

However, Indian IT vendors dominance in the market is under threat. The expansion of global service vendors like IBM, Accenture, HP, etc. into India and other low cost countries, and from the newer low cost offshore locations is allowing other companies to offer low cost options.

To counter these threats, Indian vendors started aggressively building their business domain expertise around five years ago as a means to provide higher value services and compete effectively with these new market players and gain a larger share of clients' IT budgets.

"Tier 1 Indian vendors have now built proven capabilities in developing and implementing core systems in each of the banking, capital markets, and insurance industries. They have core systems' products that are either the market leaders in their category or that have been implemented for some of the leading financial firms," says Sandeep Hebbar, author of the new Celent report, . In addition, the vendors have started engaging on IT consultancy assignments and winning complex, end-to-end outsourcing contracts.

The report profiles the top five Indian service vendors and the top product-centric vendor in the financial services domain -- Tata Consultancy Services, Infosys Technologies Ltd., Wipro Technologies, Satyam Computer Services Ltd., Hindustan Computers Limited Technologies, and i-flex Solutions -- and describes some of the areas where they possess sufficient domain expertise to build core systems and provide BPO services in the financial services domain.

The report is 46 pages long and contains 25 figures and nine tables. A table of contents is available online.

Members of Celent's research services can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.  

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

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Table of Contents

Bangalore, India 29 January 2007

Executive Summary 3
Introduction 5
Indian Outsourcing Industry 7
  Industry Structure 7
  Size and Growth 9
  Customers 9
  Indian IT in the Value Chain 10
  Key Indian IT Vendors 12
Offerings in the Financial Services Domain 14
  Services 14
  Products 16
Vendor Profiles 17
  Overview and Measurement Criteria 17
  TCS 18
  Infosys 23
  Wipro Technologies 27
  Satyam 31
  HCL 34
  i-flex  38
The Future: Graduating From Technology Superiority to Domain Excellence 41
Appendix: Service Classification 43
Objectivity and Methodology 45

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