The survey, conducted among 27 of the world's largest banks, found that financial institutions expect to reduce costs by nearly $1.4 billion each by 2008 by sending work to low-cost centres like India from developed economies in North America, Europe and Asia.

Thirty percent of the respondents currently have existing offshore operations and that percentage is expected to climb to 75 percent within two years, according to the survey. It suggests that the firms achieve 39 percent cost savings from moving operations to low-cost centres where salaries and other costs are much lower.

Functions typically transferred offshore include application development, coding and programming, accounting and finance, operations, processing and administration, contact support and call-centre operations.

"Offshoring is gaining momentum at a rapid pace," says Christopher Gentle, a director at Deloitte Research. "And getting offshoring experience as soon as possible translates into greater benefits — from higher cost reductions to more business processes being handled by the low-cost centres."

Financial institutions that can utilise their existing offshore facilities expect significant future savings because they leverage offshore scale and scope; the challenge is achieving economies of scale. Firms who fail to follow the trend risk losing out on estimated future cost savings at about 45 percent.

However, Deloitte cautions that offshore steps must be planned and executed carefully to be successful. The survey finds that more than one-third of the historical moves offshore have been unsatisfactory with the institutions planning no further relocations.

These unsuccessful moves have common characteristics, including cost reductions significantly below the average, a narrower scope with fewer functions moved offshore; a scale nearly one-fourth smaller than average, and a much shorter timeframe for planning and execution.

Of financial-services firms transferring functions offshore, nearly half are targeting India, which has a huge market of IT professionals who earn much lower wages than elsewhere. Ireland and South Africa are also attractive offshore centres, with China, Malaysia and Australia growing in popularity.

"India stands to be the major offshore hub because of its combination of low cost and high technology expertise," says Gentle. "But there's no guaranteed bonanza for India unless it continues to deliver improved services at globally competitive wage rates. Competition from other countries around the Indian Ocean rim from South Africa to Australia will be fierce."

Deloitte Research estimates that more than a million jobs — or about half of the estimated relocations — will be farmed out to the Indian Ocean rim over the next five years.