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Copyright © 2013 Everest Global, Inc.
This document has been licensed for exclusive use and distribution by Cognizant
Focus on Cognizant
September 2013
Topic: Everest Group PEAK MatrixTM for Healthcare Payer
ITO Service Providers
EGR-2013-12-E-0936
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 2
Introduction and scope
Everest Group recently released its report titled “IT Outsourcing in Healthcare Payer Industry – Service
Provider Landscape with PEAK Matrix™ Assessment and Profile Compendium 2013”. This report analyzes the
changing dynamics of the payer ITO landscape and assesses service providers across several key
dimensions.
As a part of this report, Everest Group updated its classification of 12 service providers on the Everest Group
Performance | Experience | Ability | Knowledge (PEAK) Matrix for payer ITO into Leaders, Major Contenders,
and Emerging Players. The PEAK Matrix is a framework that provides an objective, data-driven, and
comparative assessment of payer ITO service providers based on their absolute market success and delivery
capability.
Based on the analysis, Cognizant emerged both as a Leader and a Star Performer. This document focuses
on Cognizant’ payer ITO experience and capabilities and includes:
Cognizant’s position on the payer ITO PEAK Matrix
Detailed payer ITO profile of Cognizant
Buyers can use the PEAK Matrix to identify and evaluate different service providers. It helps them understand
the service providers’ relative strengths and gaps. However, it is also important to note that while the PEAK
Matrix is a useful starting point, the results from the assessment may not be directly prescriptive for each
buyer. Buyers will have to consider their unique situation and requirements, and match them against service
provider capability for an ideal fit.
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 3
Background of the research
The healthcare industry witnessed a rapid increase in the IT and business process outsourcing adoption in recent years.
Regulatory reform, consumerization of healthcare, market consolidation, and emergence of new technologies accelerated
outsourcing in the healthcare market. In order to cater to this growing market segment, a number and variety of service providers
developed capabilities.
With healthcare companies stepping up adoption of outsourced delivery, there is an uptick in demand for research and market
intelligence on demand and supply trends in healthcare outsourcing, across the three major market segments – payer, provider,
and life sciences. The need is more pronounced for the vertical-specific IT Outsourcing (ITO) function, where business
challenges are driving greater adoption. Everest Group’s healthcare outsourcing research program addresses this market
requirement by analyzing outsourcing trends and service provider capabilities specific to ITO in the healthcare vertical.
In this report, we analyze the capabilities of 15+ ITO service providers specific to the global healthcare payer sector.
Twelve of these service providers are mapped on the Everest Group Performance | Experience | Ability | Knowledge
(PEAK) Matrix, which is a composite index of a range of distinct metrics related to a provider’s capability and market
success. We focus on:
The landscape of service providers for healthcare payer ITO
Assessment of the service providers on a number of capability-related dimensions
Characteristics of the Leaders, Major Contenders, and Emerging Players on the Everest Group PEAK Matrix
Implications for healthcare payers and service providers
Scope of this report
Industry: Healthcare payers (public and private health plans)
Services: Large (TCV > US$25 million), multi-year (>three years), and annuity-based IT outsourcing
Geography: Global (though with a skew towards the U.S. payer market, given dominant market activity)
Sourcing model: Third-party ITO transactions; excludes shared services or Global In-house Centers (GICs)
Payer ITO service provider landscape: Background
and scope of the research
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 4
This report examines the service provider landscape
for large annuity contracts in the healthcare payer
ITO market
Private health plans
Public health plans
Payer
Pharmaceuticals
Medical devices
Biotechnology
Others1
Life sciences
Large health systems
Standalone hospitals/clinics
Pharmacists
Physician practices
Diagnostic labs
Provider
Healthcare
Services industry
Traditional IO
Remote Infrastructure
Management (RIM)
Infrastructure Management
Services (IMS)
Cloud
IT Infrastructure
Outsourcing (IO)
Applications development
Applications maintenance
Independent testing
Package implementation
ERP services
Business intelligence / data
warehousing
IT Application Outsourcing
(AO)
BFSI-specific BPO
HRO
FAO
PO
Contact center
Knowledge services
Business Process
Outsourcing (BPO)
IT strategy / operations
consulting
Business consulting
Infrastructure consulting
Infrastructure roll-outs
Consulting
This report assesses ITO service providers in the payer vertical with a focus on large (TCV > US$25 million), annuity-based, and multi-year
(>three years) relationships
NOT EXHAUSTIVE
Focus of report
1 Includes healthcare data and information services and medical products distribution
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 5
From a landscape of 30+ service providers, Everest Group
assessed twelve service providers for their capabilities in
payer ITO space on the Everest Group PEAK Matrix
1 Assessment for Accenture and IBM is based on Everest Group’s proprietary Transaction Intelligence (TI) database, service providers’ disclosures, and Everest
Group’s interactions with payers
Source: Everest Group (2013)
Service providers assessed on PEAK Matrix
Assessment based on:
RFIs submitted by service providers1
Everest Group Transaction Intelligence database
Service provider disclosures and interviews
Everest Group’s interaction with payer buyers
Criteria for inclusion in the
assessment
Success in large payer
ITO relationships, i.e.,
– >US$25 million TCV
– >three years
relationship duration
– Active as of December
31, 2012
Everest Group’s
experience and RFI
response
Service provider outreach (partial list)
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 6
Scale Scope Domain
investments
Delivery
footprint
1
These service providers cumulatively represent ~75% of the global large-sized payer ITO transactions1
PEAK Matrix assessment dimensions
1 Contracts that have a TCV of more than US$25 million and are active as of December 31, 2012
These service providers were mapped on Everest
Group’s Performance | Experience | Ability | Knowledge
(PEAK) Matrix
Service providers assessed
2 3 4
Ma
rke
t s
uc
ce
ss
5
Delivery capability
Everest Group PEAK Matrix
Emerging
Players
Leaders
Major Contenders
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 7
Cognizant is positioned as a Leader on the Everest
Group PEAK matrix for payer ITO
Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix for payer ITO1
1 PEAK Matrix specific to large (>US$25 million TCV) multi-year (>three years) IT outsourcing relationships within the payer sector (i.e., public and private health
plans)
2 Infosys officially reports its payer revenue under BFSI. For the purposes of 2013 PEAK Matrix evaluation, Infosys’ payer revenue have been considered under
healthcare; Infosys’ 2012 positioning was based on estimates derived from numbers Infosys reported under the healthcare industry
Note: Assessment for Accenture and IBM 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 payers
Source: Everest Group (2013)
High
Low
Low High
Delivery capability
(Scale, scope, domain investments, and delivery footprint)
Syntel
Infosys2
TCS
Dell Services Accenture
Cognizant
Leaders
Major Contenders
CGI
Emerging Players
Ma
rke
t s
uc
ce
ss
(Tra
nsa
ctio
n a
ctivity)
HCL
Virtusa
Hexaware
Fujitsu
IBM
75th percentile
75
th p
erc
en
tile
25th percentile
25
th p
erc
en
tile
Leaders
Major Contenders
Emerging Players
Star Performers
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 8
Additionally, Cognizant is also identified as a 2013
Star Performer based on its strong forward movement
on the PEAK Matrix
Methodology
Everest Group selects Market Star Performers based on the relative YoY movement of each service provider, on the
PEAK Matrix
Major Contenders
2012
2013
Leaders
Cognizant Distinguishing feature of 2012 market
success
Top quartile performance in overall
revenue growth in 2012 driven by
strong renewal activity
Strong traction witnessed across
different buyer segments (based on
size of buyers)
Entrenched its presence in the top U.S.
payers, with established engagements
in 15 out of the top 20 payers
Distinguishing feature of 2012 capability advancements
Added over a 1,000 payer ITO FTEs in 2012
Over 8,000 resources trained and certified in the payer
domain
Enhanced domain capabilities through key investments in the
payer space such as the MediCall acquisition and proprietary
solutions such as ClaimSphere HEDIS Reporting
Mark
et
su
ccess
Capability
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 9
Key financial parameters
Revenue figures in US$ million
Service mix
FY 2012; US$ million
Geographical mix
FY 2012; US$ million
Company description: Founded in 1994, Cognizant is a provider of
information technology, consulting, and business process outsourcing
services. Cognizant derives over 26% of its revenue from healthcare;
other industries served include BFSI, manufacturing and retail, and
logistics. The company serves its global customers through its dedicated
nearshore and offshore development and delivery centers, primarily
located in India, China, United States, Canada, Argentina, Hungary,
Mexico, and the Philippines
Headquarters: Teaneck, New Jersey, United States
Website: www.cognizant.com
Services offered for the healthcare vertical: Application
services across the payer, provider, and life sciences segments.
Services for the payer segment include ICD-10 transition,
healthcare reform compliance, health analytics and BI, claims
processing, managed care product configuration and
implementation, privacy and security, quality and claims auditing
and reporting, and legacy systems modernization
Major healthcare clients: HealthNet, AstraZeneca, Pfizer,
Merck, Eli Lilly, and Pistoia Alliance
1 FY ends on December 31
Source: Everest Group (2013)
Revenue1 from healthcare
Revenue1 from other verticals
Enterprise operating margin
Scale of healthcare subverticals
Payer Life sciences Provider
>US$500 million US$100-500 million <US$100 million
51% 49%
100% = 7,346 100% = 7,346
North
America
Europe
Others IT
Outsourcing
IT consulting
& technology
services
3,415 4,499 5,412 1,177
1,622 1,935
FY 2010 FY 2011 FY 2012
18.8%
4,592 6,121
7,346 18.6%
18.5%
79.4%
16.3%
4.3%
Cognizant | Payer ITO profile (page 1 of 6)
Corporate and healthcare overview
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 10
Scope
Primarily serves private health plan clients
Geographical scope of contracts is primarily the United States
Services include infrastructure services, ADM, testing, and DW/BI
Equal mix of revenue from large and small deals
Strong focus on transformational deals including various aspects
Delivery footprint
Payer ITO services mainly delivered from India
Delivery presence in Shanghai in China, Toronto in Canada, Manila in
the Philippines, and Phoenix in the United States
Transaction success
Average TCV of ~US$100 million for large-sized payer ITO deals
Major payer ITO clients: 15 of the top 20 payers
Domain investments
Proprietary solutions for ICD-10 transition, claims management,
audit/processing, health records, etc.
Alliances in areas such as claims, ICD-10, network management, fraud
detection, health portals, HIE, EMR, BPM, CRM with vendors such as
PEGA, EDIFECS, HealthEdge, InterSystems, Microsoft, SAP, and Oracle
Headline assessment
Cognizant positioned itself as a global Leader in the payer ITO services
showing strong growth even on a large revenue base. To maintain this growth
momentum, it is looking to expand beyond the North American market.
Scale
Strong focus on healthcare with over 26% revenue (US$1.9 billion) from
the healthcare vertical
With over US$800 million revenue from payer ITO, Cognizant is the
largest among offshore majors for payer ITO
Over 15,000 FTEs engaged in delivering payer ITO services
1 Transaction success for large-sized deals
Source: Everest Group (2013)
North America EMEA
Latin America APAC
Geographic scope Payer subsegments
High Medium Low Success dashboard1
Public health plans
Private health plans
Everest Group PEAK Matrix for payer ITO
High
Low Low High Delivery capability
(Scale, scope, domain investments, and delivery footprint)
Mark
et
su
ccess
(Tra
nsaction a
ctivity)
Cognizant
Emerging
Player
Major Contender Leader
Cognizant
2012
Cognizant | Payer ITO profile (page 2 of 6)
Payer ITO capability assessment and market success
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 11
Proprietary solutions (representative list)
Line of Business Solutions
Payer Claims Audit: End-to-end solution for the claims audit process
ClaimsCop: Solution covering detection of fraudulent claims, subsequent investigation, and
recovery process
ClaimSphere Analytics: Suite of payer analytics focusing on the cost of care, membership
analytics, utilization management etc.
ClaimSphere HEDIS: NCQA-certified HEDIS solution with standard analytics to identify care
opportunities
eCareManager: Care management solution to offer member identification, stratification and care
manager workflows, interventions, assessments, outcome analysis, and E2E analytics
eHealth Framework: Payers’ self-services portal and framework to offer self-services to members,
providers, groups, and brokers
Enrolment and membership pre-processing framework: Payers’ enrolment solution to address
paper and electronic enrolment processing and convert the data to EDI 834
Enterprise managed care services library (eMCSL) Framework: SOA services and Process flow
framework addressing areas such as membership, enrolment, claims, and ProvidersmyHealthLog,
a personal Health records solution, which integrates data from multiple sources
RTClaim Framework: Real-time claims adjudication services to support implementations at payers,
providers, and TPAs
T10 Suite for ICD-10: Cognizant’s tool suite enabling ICD-10 compliance
Drug Switch Tool: Helps pharmacists identify the low cost therapeutic drug alternates for a
member, based on their prescription details
Source: Everest Group (2013)
Cognizant | Payer ITO profile (page 3 of 6)
ITO domain investments
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 12
Acquisitions
Target Date Capabilities added
MediCall October 2012 Acquisition of the U.S.-based medical management services firm with operations in the
Philippines provides Cognizant a significant presence in the space
IP investment
Ongoing To build reusable IP, platforms, tools, and frameworks around ICD-10 compliance, care /
patient management, payer/provider analytics, mobility, and BPaaS/cloud services
Certifications
Ongoing Training and certification in domain areas such as AHP, HL7, DICOM and various
technology platforms (.NET, Java, J2EE, IBM, EAI tools, etc.)
Key alliances (representative list)
Alliance partner Purpose of alliance
(Several) Alliances in joint go-to-market programs, implementation services and centers of excellence in areas
such as claims, ICD-10, network management, fraud detection, health portals, HIE, care
management, HIS/EMR, EDI, EAI, BPM, and CRM
Vendors include PEGA, HealthEdge, InterSystems, Microsoft, SAP, Oracle, EDIFECS, VUE, Plexis,
Kony, NetApp, Caradigm, etc.
Source: Everest Group (2013)
Cognizant | Payer ITO profile (page 4 of 6)
ITO domain investments
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 14
Top quartile performance
across market success
and capability
2nd or 3rd quartile
performance across market
success and capability
4th quartile performance
across market success
and capability
High
Low
25
th p
erc
en
tile
75
th p
erc
en
tile
75th percentile
Ma
rke
t s
ucc
es
s
Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix
Emerging Players
Leaders
Major Contenders
Delivery capability
Low High 25th percentile
Everest Group Performance | Experience | Ability |
Knowledge (PEAK) Matrix classifies service providers into
Leaders, Major Contenders, and Emerging Players
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 15
Service providers are positioned on the PEAK Matrix
based on evaluation across two key dimensions
Measures the scope of
services provided across
segments, processes,
industries, geographies,
etc.
Measures the capability
and investment in the
enabling areas that help
deliver better services
Measures the delivery
footprint and the global
sourcing mix
Measures success
achieved in the market.
Captured through a
combination of
ACV/TCV/number of
contracts, renewals, etc.
Measures ability to deliver services successfully.
Captured through four subdimensions
Measures the scale of
operations (Revenues,
Number of FTEs, etc.)
Scale Scope Enabling capabilities Delivery footprint
Emerging Players
Leaders
Major Contenders
Ma
rke
t S
ucc
es
s
Delivery capability
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 16
Year 1
Year 0
Service
provider
Ma
rke
t s
uc
ce
ss
Capability
Methodology
Everest Group selects Market Star Performers based on the relative YoY movement of each
service provider, on the PEAK Matrix
In order to assess advancements on
market success, we evaluate the
performance of each of the service
providers on the PEAK Matrix across a
number of parameters including:
Yearly ACV growth
Number of new contract signings
Yearly growth in total payer ITO TCV
Success with large payers
Payer ITO revenue CAGR
In order to assess advancements on
capability, we evaluate the performance
of each service provider on the PEAK
Matrix across a number of parameters
including:
Annual growth in scale
Increase in scope of services
Expansion of delivery footprint
Technology / domain-specific
investments
The top-quartile performers on each of the
identified parameters are identified and the
“Star Performer” rating is awarded to the
service providers with:
The maximum number of top-quartile
performances across all of the above /
left-listed parameters and
At least one area of top-quartile
performance in both market success
and capability advancement
The “Star Performers” designation relates to YoY performance for a given service provider and does
not reflect the overall market leadership position. Those identified as “Star Performers” may include
“Leaders”, “Major Contenders”, or “Emerging Players”
Everest Group designates the “Star Performers” title
to providers that demonstrate the strongest forward
movement over time on the PEAK Matrix
Market
Star
Performers
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 17
FAQs (page 1 of 2)
Does the PEAK Matrix assessment incorporate any subjective criteria?
Everest Group’s PEAK Matrix assessment adopts an objective and fact-based approach (leveraging service
provider RFIs and 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 “Emerging Player” 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
services area. 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 itself a favorable recognition
What other aspects of PEAK Matrix assessment are relevant to buyers and providers besides the “PEAK
Matrix position”?
PEAK Matrix position is only one aspect of Everest Group’s overall assessment. In addition to assigning a “Leader”,
“Major Contender”, or “Emerging Player” 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 for 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 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
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 18
FAQs (page 2 of 2)
What is the process for a service provider to leverage their PEAK Matrix positioning status ?
Providers can use their PEAK Matrix positioning rating in multiple ways including:
– Issue a press release declaring their positioning/rating
– Customized PEAK Matrix profile for circulation (with clients, prospects, etc.)
– Quotes from Everest Group analysts could be disseminated to the media
– Leverage 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
Copyright © 2013, Everest Global, Inc.
EGR-2013-12-E-0936 19
Everest Group
Leading clients from insight to action
Everest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helping
Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With a
fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and
delivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting,
original research, and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and
sourcing models, technologies, and management approaches. Established in 1991, Everest Group serves users of global
services, providers of services, country organizations, and private equity firms in six continents across all industry categories. For
more information, please visit www.everestgrp.com and research.everestgrp.com.
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