HFS Highlight: EXL looks to differentiate within its industry domains with an ambitious data-led approach

The ongoing pandemic has completely transformed the world as we know it, and one of the most notable differences is the enhanced reliance on digital technologies. Be it the university students learning on Zoom and Teams, the small businesses shifting to a digital business model or the multinational companies accelerating their digital transformation efforts – digital technologies are here to stay. EXL outlined this trend at their recent Analyst and Advisor day events; senior management explained that in order to succeed in the new world businesses must pivot to a data-led approach, and they believe their deep domain and analytics expertise make them the perfect partner to help enterprises achieve this.

Data-led businesses will need analytics, says EXL, and that’s an area the service provider consistently posted double-digit year-over-year revenue growth pre-pandemic.

The demand for analytics has shot up since the outbreak of Covid-19, a recent survey found that 49% of respondents reported analytics are more important thanks to the pandemic, and it’s somewhere the provider really thinks it can excel.  If we look at Exhibit 1, we can see that its analytics business is its highest revenue contributor (36%), and alongside this EXL has posted consistent double-digit growth for some years now.

Exhibit 1: EXL’s Analytics business was the highest contributor to the provider’s annual revenue in FY2019

Source: HFS Research and EXL’s quarterly earnings reports, 2020

But a growing business-line can’t be developed overnight, and EXL’s analytics business is no different. EXL’s investment in the market can be traced all the way back to 2006 when it acquired Inductis, a strategy and analytics company with a focus on the banking and financial services (BFS) market. More recently, the provider has made numerous investments in the business, including the acquisitions of IQR Consulting and SCIO Health Analytics in 2016 and 2018 respectively. Put simply, EXL has all the makings of a strong analytics provider, and it’s something their clients were quick to praise when HFS spoke to them as a part of our recently released Triple-A Trifecta Services Top 10.

To demonstrate their analytics capabilities, and the value of their data-led approach EXL outlined their recovery index tracker at the recent event. They developed this solution in response to the Covid-19 outbreak, and it allowed EXL’s clients to track and predict recovery in certain regions and businesses, helping clients identify pockets of recovery to target investment throughout the pandemic.

But analytics experience alone isn’t enough; EXL has deep domain expertise in a small selection of key industries.

EXL by no means has a depth of experience in every industry, but they instead specialize in a small number of verticals, combining their wider capabilities with the deep domain expertise to offer robust solutions to their clients. One such vertical is insurance, which is EXL’s second largest revenue contributor (30%), as you can see in exhibit 1, and it’s an industry which the provider’s senior management described as “large, unpenetrated and fast-growing”. It’s actually a very good fit for EXL – the insurance industry boasts data in abundance but lacks broad-based analytics capabilities, which means insurers are prime candidates for pivoting to a data-led operating model. EXL’s rich insurance experience means it really could become a preferred partner for insurers as they look to navigate the newfound pandemic economy.

Alongside insurance, EXL also told us that they are investing heavily in the healthcare industry, which currently contributes less than 10% of their total revenue. Even before the outbreak of Covid-19, there were countless calls for healthcare providers to better manage data. Given EXL’s recent announcement of the EXL Health brand, the provider is really gearing up to break into this market, bringing with it its analytics-fueled data-led methodology, and it will be interesting to see what the future holds for EXL in this space.

And EXL’s continued investment in digital assets could bring all of these pieces together.

Over the last decade we have seen EXL announce countless new partnerships and acquisitions to bulk out their digital platforms, and these platforms could be the glue that brings the pieces together and makes EXL’s data-led approach a reality. EXL believes the traditional transformation approach of process map lead automation under delivers and doesn’t justify further investments. Using their proprietary digital command center, NerveHub™, EXL reimagines the legacy process into a digital dataflow architecture, making it much simpler to analyze.

Also, EXL has made three recent investments which stand out from the rest;

• The first is Exelia.AI, a product of EXL’s recent strategic partnership with Amelia, an IPsoft company with a goal to infuse AI into every customer interaction leveraging conversational AI and deliver the trifecta impact (superior experiences, better outcomes, and lower costs).
• The second is its partnership with Argus, a data division of Verisk Analytics, to create new industry-level collections metrics, benchmarks, and insights that will serve as a foundation for better understanding and augmentation of the digital debt collections experience. The partnership will further strengthen EXL’s PayMentor solution that will allow lenders to respectfully and sensitively interact with consumers on their digital channel of choice.
• The third investment is Xtrakto.AI, an AI/NLP-fueled content extraction solution that helps enterprises address their unstructured data challenges.

These investments, along with the many others from EXL, really demonstrate the providers commitment to crucial components like customer experience and could play a pivotal role for any enterprise buying into EXL’s data-led philosophy.

The Bottom Line: EXL is aiming for the stars; its data-led approach is definitely addressing market needs, but delivering on this promise will require change management expertise

EXL has undeniably developed a clear message around its data-led approach, and with the help of its domain expertise, the service provider looks well-positioned to help its clients make this transition. But, as is often the case, the proof really will be in the pudding. We already know that EXL has rich analytics capabilities, and the impressive revenue growth proves it, but the service provider needs to clearly demonstrate it is capable of supporting clients with advanced and predictive analytics embedded as a part of larger operations engagements, as opposed to standalone projects.

At the event, EXL’s senior leadership spoke about the need for enterprise to ‘predict and recommend’ with analytics, and this is exactly what we need to see from EXL. If the service provider is successfully able to offer genuine business value through advanced analytics embedded within business operations, and it can effectively affect data-driven decisions for its clients through digital change management, then EXL’s data-led approach will set new standards for intelligent operations within its chosen industry verticals.