Boston, June 8, 2017 – The global IT services sector continues to be dominated by lowest-cost, predominantly India-based human capital, and the motivation to engage with these services continues to be labor arbitrage. The expectation to improve performance—via higher-quality output, more efficient output, or some other innovation—is rarely made explicit. But could the potential for enhanced process efficiencies add value to the equation, particularly now that IT services firms seem embedded in long-term—if not perpetual—partnerships with large banks, insurance companies, and asset managers?

This report, co-authored by Alphacution's Paul Rowady and Aite Group's Sang Lee, estimates the portion of banks’ IT spending that is attributable to the IT services sector and characterizes the wisdom of shorter-term cost savings objectives in the face of potential longer-term and arguably intangible liabilities for banking, financial services, and insurance. Aite Group’s data and analytics partner, Alphacution Research Conservatory, is a data and analytics firm focused on providing technical infrastructure intelligence and has developed a standardized data-driven framework that can measure technical leverage—the return on technology. This report is based on data from Alphacution’s model library, which currently includes financial and operational data related to more than 110 banks, brokers, asset managers, technology vendors, exchanges, and others.

This 33-page Impact Note contains 28 figures. Clients of Aite Group’s Institutional Securities & Investments service can download this report, the corresponding charts, and the Executive Impact Deck.

This report mentions Capgemini, Cognizant, Computer Sciences Corporation (CSC), EXL Services, HCL, Hewlett Packard Enterprise, Infosys, PwC, Tata Consultancy Services, Unisys, Wipro, and XC Technology.