Everest Group's PEAK Matrix for Banking AO Service Providers

Topic: Everest Group’s PEAK MatrixTM for Capital Markets AO Service Providers

Focus on HCL Technologies August 2015

Background of the research

Capital markets industry is grappling with high regulatory pressures, intense competition, and an uncertain economy. Market participants are adopting disruptive business models to contain cost and improve profitability. As the financial services industry undergoes a technology revolution through adoption of digital technologies, capital markets players are investing in next-generation technologies to stay ahead of competition. Buy-side and sell-side participants, as well as financial intermediaries are investing in risk & compliance management solutions, automation, cloud & open-source technologies, mobility, high-end analytics, and third-party platforms as they focus on cost reduction, standardization, and portfolio rationalization.

With the capital markets industry witnessing a number of changes, IT service providers are looking to capitalize on the opportunity by tailoring their offerings with next-generation technologies, providing commoditized services, collaborating with buyers to invest in innovation, and forming alliances with leading platform providers.

In this research, we analyze the capabilities of 24 leading AO service providers, specific to the global capital markets sector. These providers were mapped on the Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix, which is a composite index of a range of distinct metrics related to each provider’s capability and market success. . Additionally, Everest Group has also profiled the capabilities of these 24 service providers in detail including a comprehensive picture of their service suite, scale of operations, domain investments, delivery locations, and buyer satisfaction specific to capital markets AO services

This document focuses on HCL Technologies’ capital markets AO experience and includes:  Overview of the capital markets AO service provider landscape  Everest Group’s assessment of HCL Technologies’ delivery capability and market success on PEAK matrix  Detailed capital markets AO profile for HCL Technologies

Copyright © 2015, Everest Global, Inc. 2 This Everest Group report is a compendium of detailed profiles of 24 service providers featured on Everest Group’s capital markets AO PEAK Matrix NOT EXHAUSTIVE BFSI Focus of report

Banking Capital markets Insurance

 Retail financial services (B2C1)  Investment banking  Life and pensions  Retail banking  Asset management  Property and casualty  Lending  Custody and funds administration  Others  Cards  Brokerage  Commercial banking (B2B2)  Others3

Services industry

IT Infrastructure IT Application Outsourcing Business Process Outsourcing (IO) (AO) Outsourcing (BPO) Consulting

 Traditional IO  Application development  BFSI-specific BPO  IT strategy / operations  Remote Infrastructure  Application maintenance  HRO consulting Management (RIM)  Independent testing  FAO  Business consulting  Infrastructure Management  Package implementation  PO  Infrastructure consulting Services (IMS)  ERP services  Contact center  Infrastructure rollouts  Cloud  Business intelligence / data  Knowledge services warehousing

Digital Services Services in next-generation technologies leveraged by enterprises to enable transformation including social, mobility, analytics, cloud, and others (artificial intelligence, robotics process automation, internet of things, machine-to-machine, etc.) 1 Business-to-consumer relationships 2 Business-to-business relationships 3 Includes other capital markets functions such as structured finance, treasury, FX, and horizontal functions including risk management

1  Everest Group’s proprietary database of 500+ large, active, multi-year AO Service providers covered in the analysis1 contracts within BFSI (updated annually through primary data collection via service provider RFIs)1  The database tracks the following elements of each large AO relationship: – Buyer details including industry, size, and signing region – Contract details including TCV, ACV, term, start date, service provider FTEs, and pricing structure – Activity broken down separately for banking, capital markets, insurance, and by line of business (for example, investment banking, asset management, custody, fund administration, and brokerage) – Scope includes coverage of buyer geography as well as functional activities – Global sourcing including delivery locations and level of offshoring

2  Everest Group’s proprietary database of operational capability of 20+ BFSI AO service providers (updated annually through primary data collection via service provider RFIs)  The database tracks the following capability elements for each service provider: – Major BFSI AO clients and recent wins – Overall revenue, total employees, and BFSI employees – Recent BFSI-related developments – BFSI AO delivery locations – BFSI AO service suite – Domain capabilities, proprietary solutions, and intellectual property investments

1 Assessment for Accenture, Capgemini, CSC, Hexaware, IBM, and Mphasis excludes service provider inputs, and is based on Everest Group’s proprietary Transaction Intelligence (TI) database, service provider public disclosures, and Everest Group’s interactions with capital markets buyers Note: We continuously monitor market developments and track additional service providers beyond those included in the analysis Confidentiality: Everest Group takes its confidentiality pledge very seriously. Any information, that is contract-specific, will be presented back to the industry only in an aggregated fashion

Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix for large capital markets AO relationships1

Leaders 75th percentile High Major Contenders Leaders Aspirants TCS Star Performers Wipro Cognizant Infosys Accenture IBM HCL Major Contenders CGI

Luxoft Capgemini percentile

th 75 success EPAM CSC L&T Infotech Market Polaris IGATE Mphasis Genpact Tech Mahindra Dell Services Virtusa

percentile Hexaware

th Birlasoft

25 Syntel NIIT Technologies Aspirants Low Low 25th percentile High Capital Markets AO delivery capability (Scale, scope, domain investments, delivery footprint, innovation, and buyer satisfaction)

1 PEAK Matrix specific to large (>US$25 million TCV), multi-year (>3 years) application outsourcing relationships for the capital markets sector (Investment banking, asset management, custody, fund administration, and brokerage); excludes banking and insurance Note: Assessment for Accenture, Capgemini, CSC, Hexaware, IBM, and Mphasis excludes service provider inputs and is based on Everest Group’s proprietary Transaction Intelligence (TI) database, service provider public disclosures, and Everest Group’s interactions with capital markets buyers Source: Everest Group (2015)

>US$500 million US$100-500 million

Company description: Established in 1991, HCL Technologies is a Scale of BFSI subverticals global provider of IT solutions, product engineering, custom & package applications, BPO, IT infrastructure services, IT hardware, systems Banking Capital markets Insurance integration, and distribution of ICT products across select industry verticals. HCL Technologies is the services business arm of the Key financial parameters Revenue1 from the BFSI vertical US$6.5 billion HCL Enterprise, which also includes the hardware Revenue in US$ million Revenue1 from other verticals business unit, HCL Infosystems. The HCL team consists of over 105,000 Operating margin professionals who operate from 31 countries, including over 500 24.2% locations in India 16.3% 20.1% 5,360 Headquarters: Noida, India 4,686 4,152 1,436 Website: www.hcltech.com 1,019 1176 3,510 3,924 Geographical mix Service mix 3,133 FY 2014; US$ million FY 2014; US$ million FY 2012 FY 2013 FY 2014

100% = 5,360 100% = 5,360 Services offered for the BFSI vertical: ADM, application BPO services maintenance, independent testing, SI, enterprise transformation Engineering and Infrastructure services, product engineering, enterprise application services, RoW R&D services services infrastructure services, digital transformation services (mobile, 12% 5% cloud, and analytics), reporting services & business consultancy, 16% and services and process transformation 34% Domains – asset management, wealth management, risk & 32% 56% Europe 17% compliance, investment banking & exchanges and securities and Enterprise fund services, channels, and payments application Americas 28% services Custom Major BFSI clients: Deutsche Bank, Commonwealth Bank of application Australia, Lloyd's Banking group, DNB Bank, and Standard Bank of South Africa 1 FY ends on June 30 Source: Everest Group (2015)

Everest Group PEAK Matrix for Capital Markets AO 75th percentile Capability dashboard High Leaders TCS Capital markets lines of business Geographic scope Wipro Cognizant Infosys Accenture I-banking Brokerage North America EMEA IBM HCL Major Contenders CGI Asset mgmt. Custody & fund admn Latin America APAC

Luxoft Capgemini percentile

th success

EPAM 75 CSC Key technology Risk & regulatory Mobility Analytics L&T Infotech Polaris spend areas Market IGATE compliance Social Cloud Mphasis Genpact Tech Mahindra Dell Services Hexaware Virtusa Established: Mature capabilities with high adoption Credible: Strong capabilities percentile Birlasoft th Syntel Emerging: Nascent capabilities with limited adoption with rising adoption 25 NIIT Technologies Aspirants Low Market share by active ACV Market share by number of contracts Low 25th percentile High Capital Markets AO delivery capability (Scale, scope, domain investments, delivery footprint, innovation, and buyer satisfaction) 6% 6% Strengths PEAK Matrix dimensions assessment  Strong and sustained growth of capital markets AO revenue across Europe and North America Dimension Rating  Challenger positioning in the marketplace through innovative and flexible engagement models  Strong focus on investment banking and asset management subvertical, also serves custody & fund Market success administration and brokerage LoBs across all AO subfunctions  Though delivery footprint for banking AO is concentrated in India, it expanded its presence in Europe Scale with three new delivery centers Scope  Launched new solutions for regulations compliance, reference data management, and reporting tools for investment banks to reduce cost, time, and effort for software development activities Domain investments

Delivery footprint Areas of improvement

 HCL needs to expand its delivery footprint in nearshore locations to better serve clients and improve Innovation visibility outside the existing client base Buyer satisfaction  HCL need’s to evolve its proposition for digital and next-generation IT services specific to capital markets High Low Source: Everest Group (2015) Copyright © 2015, Everest Global, Inc. 7 HCL Technologies | Capital markets ITO profile (page 3 of 8) AO domain investments

Proprietary solutions (representative list) (continued) Line of business Solutions

Overall BFSI  CoRep/FinRep: An accelerator framework to help banks and NBFC (credit and investment firms) to publish reports that are mandated by European regulatory authorities  CCAR: An accelerator framework with one click, pre-built reports for banks and NBFC that are mandated by the U.S. regulatory authority  Mobile Tracer: Solution enables tracing mobile users within a wi-fi range  Finedge: Financial services CRM solution  HCL MBark: A customer onboarding framework (launched in 2011)  Payments Accelerators: Payments accelerators developed for various clients  PRIZMTM: This is a proprietary application portfolio assessment and optimization tool

Capital markets  HCL Report: A reporting solution which allows Summit users (business and IT users) to create reports on the fly through a GUI based interactive tool. This solution is part of the HCL eXcite Suite (launched in 2014)  HCL Convert: An accelerator to fast track data migration of static data, market data and trade data, especially useful during Summit upgrades and merger of multiple instances. This solution is part of the HCL eXcite suite  SFDC-Wealth CRM: CRM solution for the wealth management industry, enabling wealth managers / advisor community with advisory functions and client-centric engagement tools  ExactTM Framework: Tools for application portfolio rationalization  Decommissioning Bluebook: Application Portfolio Assessment and Optimization tool for decommissioning execution  XekData: Data management solution which offers a cross asset, cross trading, and cross referencing platform  InvesIT: A research management solution  XekPost – Fund Order Management Solution (FOMS): An STP solution for middle- and back-office fund users  FinEdge Wealth: CRM solution for wealth management, insurance, and corporate banking to deliver customer interface enabling customer retention and loyalty management

Source: Everest Group (2015)

Proprietary solutions (representative list) Line of business Solutions

Capital markets  TradeXek: Handles reporting for exchanges and financial Institutions through automatic TRS reporting and (continued) enabling full compliance with MiFID regulations regarding reporting requirements for the financial institutions and exchanges (launched in 2014)  Invest IT: Global research and content management platform monetized from a leading I-Bank and is productized today (launched in 2014)  BestXek: Selects the best venue for trade execution using built-in algorithms based on market performance factors  ICON: A primary investments pricing and accounts system  HCL PEAK: Test automation framework for COTS products such as Summit

Others  Mobility frameworks: Mobility solutions built around ipad and iphone  Alt ASM: Business Aligned Target Operating Model with committed operational gains and optimal service levels through LEAN and ITIL practices  GreenfieldTM: A framework to industrialize custom application development in the Java and .Net space that enables greenfield projects to execute faster, cheaper, and better

Regulatory  CoRep/ FinRep: An accelerator framework to help the banks and NBFC (credit and investment firms) to publish Reporting the reports that are mandated by European regulatory authorities (launched in 2014)  CCAR: Comprehensive capital analysis and review (CCAR) framework for stress testing and capital assessment (launched in 2014)

Source: Everest Group (2015)

Acquisitions (representative list) Target Date Capabilities added Software assets 2011 HCL acquired software assets in the custody space from a Fortune 50 universal bank and from a Fortune 50 rebranded these as TradeXek suite of products universal bank

Source: Everest Group (2015)

Key alliances (representative list) (continued) Alliance partner Purpose of alliance Axiom Alliance formed in 2013 for AXIOM ControllerView, a regulatory reporting tool CSC Strategic partnership formed in 2013 for application modernization and transitioning to cloud

Misys Strategic partnership for offering Misys products in the areas of banking and capital markets Chordiant Software Consulting and system integration services for the BFSI industry Inc. Avaloq Strategic partnership augmenting HCL’s experience in wealth management IT services

Swisscom Strategic service partnership at enterprise level

Orbium Preferred implementation partner of Avaloq solutions, another partner of HCL

DerivIT Alliance in the capital markets domain

Kony Global integrator in the mobility domain

Fenergo Tactical partnership to provide client onboarding solution

Source: Everest Group (2015)

NOT EXHAUSTIVE

Recent transaction activity1 Announcement TCV estimate Duration AO/IO/ Buyer’s name date (US$ million) (years) Both Contract details and services U.S.-based financial January 2013 N/A N/A AO SAP deployment services company

1 Publicly-announced capital markets ITO transactions during 2012 to 2015 Source: Everest Group (2015)

NOT EXHAUSTIVE

Confirmed location for Capital markets AO 500-1,000 AO FTEs >5,000 AO FTEs 100-500 AO FTEs 1,000-5,000 AO FTEs <100 AO FTEs

Poland

Puerto Rico Mexico Philippines India Indonesia Malaysia Brazil Singapore

South Africa

Note: FTE strength represents the total number of AO FTEs across different industries for the particular country Source: Everest Group (2015)

Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix for Application Outsourcing

75th percentile High Leaders Top quartile performance Major Contenders across market success and capability 2nd or 3rd quartile performance across market success and

capability percentile

success Market

percentile Aspirants

th 4th quartile performance 25 across market success and capability Low Low 25th percentile High AO capability (Scale, scope, domain investments, delivery footprint, innovation, and buyer satisfaction)

Everest Group’s PEAK Matrix is a composite index of a range of distinct metrics related to a service provider’s scale, scope, technology/domain investments, delivery footprint, innovation, buyer satisfaction, and resultant market success in the context of a given outsourcing function

Everest Group PEAK Matrix

ACV of large active AO Leaders deals Major Contenders

Number of large, active

AO deals Market success Market Yearly vertical specific AO revenue growth Aspirants

Delivery capability

Domain Scale Scope Delivery footprint Innovation Buyer satisfaction investments

Total company Lines of Business Proprietary Onshore, Innovative Customer revenue (LoBs) served solutions nearshore, and solutions experiences with offshore service providers capabilities for vertical Contribution of AO subfunctions Certifications Innovative specific AO vertical specific Number of engagement services AO revenue to delivery centers models the total company Geographies M&A and and regions Client renewal revenue served alliances covered activity

Does the PEAK Matrix assessment incorporate any subjective criteria?  The Everest Group’s PEAK Matrix assessment adopts an objective and fact-based approach (leveraging service provider RFIs and the Everest Group’s proprietary databases containing providers’ deals and operational capability information). In addition, these results are validated / fine-tuned based on our market experience, buyer interaction, and provider briefings

Is being a “Major Contender” or “Aspirant” on the PEAK Matrix an unfavorable outcome?  No. PEAK Matrix highlights and positions only the best-in-class service providers in a particular functional/vertical. There are a number of providers from the broader universe that are assessed and do not make it to the PEAK Matrix at all. Therefore, being represented on the PEAK Matrix is in itself a favorable recognition

What other aspects of the PEAK Matrix assessment are relevant to buyers and providers besides the “PEAK Matrix position”?  The PEAK Matrix position is only one aspect of the Everest Group’s overall assessment. In addition to assigning a “Leader”, “Major Contender” or “Aspirant” title, Everest Group highlights the distinctive capabilities and unique attributes of all the PEAK Matrix providers assessed in its report. The detailed metric level assessment and associated commentary is helpful to the buyers in selecting particular providers for their specific requirements. It also helps providers showcase their strengths in specific areas

What are the incentives for buyers and providers to participate / provide input to the PEAK Matrix research?  Participation incentives for buyers include a summary of key findings from the PEAK Matrix assessment  Participation incentives for providers include adequate representation and recognition of their capabilities/success in the market place, and a copy of their own “profile” that is published by Everest Group as part of the “compendium of PEAK Matrix providers” profiles

What is the process for a service provider to leverage their PEAK Matrix positioning status ?  Providers can use their PEAK Matrix positioning in multiple ways including: – Issue a press release declaring their positioning/rating – Customized PEAK Matrix profile for circulation (with clients, prospects, etc.) – Quotes from the Everest Group’s analysts could be disseminated to the media – Leverage the PEAK Matrix branding across communications (e-mail signatures, marketing brochures, credential packs, client presentations, etc.)  The provider must obtain the requisite licensing and distribution rights for the above activities through an agreement with the designated PoC at Everest Group

Everest Group is a consulting and research firm focused on strategic IT, business services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem- solving skills and original research. Details and in-depth content are available at www.everestgrp.com and research.everestgrp.com.

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