Introduction
 
Horizontal BPO services are, overall, further advanced in terms of market development than the more sector-specific vertical BPO services. While a great deal of this development has happened in a service bureau or managed service set-up in the past, future growth will be driven by strategic horizontal BPO which emphasizes cross-functionality and process transformation.
 

 
Scope
 
In-depth discussion of human resources, finance and accounting and procurement outsourcing services
 
Detailed analysis of horizontal BPO vendors operating in the European financial services market
 
Spending forecasts to 2008 for individual horizontal BPO segments across the European financial services sector
 
Highlights
 
There is a move towards a more strategic view of horizontal BPO manifested through the interest in complete centralized shared service outsourcing. Datamonitor views this as a more or less nascent market which, despite drawing on the more fragmented first wave of horizontal services, is in the early stages of growth.
 

 
Procurement is set to be the fastest growing horizontal BPO function to 2008. Procurement is moving towards including more strategic aspects such as supplier selection and technology integration of suppliers. Seen as a strong cost play, the procurement BPO segment will benefit from a good fit with FSIs' strongly efficiency-driven strategies.
 

 
Increasing vendor credibility has been a key enabler of the move towards a more strategic approach to horizontal BPO. Specifically this has been driven by M&A among horizontal BPO vendors and IT services companies making significant acquisitions in the market.
 

 
Reasons to Purchase
 
Understand drivers and barriers to take-up to enhance sales success in the FS horizontal BPO market segment
 
Improve positioning in the horizontal BPO market with detailed knowledge of competitors and market perceptions
 
Understand the dynamics and growth potential of outsourced central enterprise services to improve marketing and sales efficiency

TABLE OF CONTENTS
 
CHAPTER 1 EXECUTIVE SUMMARY 3
 
Market context 3
 
Competitive dynamics 4
 
The future decoded 5
 
CHAPTER 2 MARKET CONTEXT 11
 
Introduction 11
 
Key findings 11
 
Introduction 12
 
Market segments 12
 
Human resources outsourcing 13
 
Finance and accounting outsourcing 14
 
Procurement outsourcing 15
 
Drivers and trends 16
 
IT strategy drivers: balanced approach dominates 16
 
Moving to strategic BPO 16
 
Increasing vendors’ credibility 17
 
Improved openness to horizontal BPO 18
 
Operational risk regulation makes outsourcing more attractive option 19
 
Global sourcing strategies 19
 
CHAPTER 3 COMPETITIVE DYNAMICS 20
 
Introduction 20
 
Key findings 20
 
IT services and vertical BPO providers 22
 
Process experts 22
 
Competitive structure 24
 
IT outsourcing generalists 25
 
Process experts 26
 
Key BPO providers 27
 
Regional horizontal BPO champions 28
 
Emerging competitors 28
 
CHAPTER 4 THE FUTURE DECODED 30
 
Introduction 30
 
Key findings 30
 
Outsourcing market segments: procurement grows fastest, but long-term trend narrows growth discrepancies 32
 
Line of business trends: retail banking to grow most over period 34
 
Retail banking 34
 
Financial markets 35
 
Insurance 36
 
CHAPTER 5 APPENDIX 37
 
Abbreviations 37
 
Forecasts and assumptions 37
 
What currencies are used? 37
 
Future readings 38
 
SPP writing team 38
 

 
LIST OF TABLES
 
Table 1: Horizontal BPO segment growth in financial services, 2004 - 2008 32
 
Table 2: Horizontal BPO services spend per line of business, 2004 - 2008 34
 

 
LIST OF FIGURES
 
Figure 1: Market context 3
 
Figure 2: Competitive dynamics 4
 
Figure 3: The future decoded 5
 
Figure 4: Market maturity model: the horizontal BPO market has gained critical mass and needs to tackle the transformational challenge to boost future growth 12
 
Figure 5: Human resources outsourcing 13
 
Figure 6: Finance and accounting outsourcing 14
 
Figure 7: Procurement outsourcing 15
 
Figure 8: What will be the primary drivers of your IT strategy in 2005? 16
 
Figure 9: Horizontal BPO openness is ahead of vertical markets, but strong growth can continue with interest remaining high 18
 
Figure 10: Vendor map 24
 
Figure 11: Competitive positioning 25
 
Figure 12: Horizontal BPO segment growth in financial services, 2004 - 2008 32
 
Figure 13: Line of business horizontal BPO growth in financial services, 2004 - 2008 34