15 December 2017
visit www.solutions.lexisnexis.com

Offshore outsourcing set to accelerate

06 May 2003  |  4315 views  |  0 user office computers

US financial services firms are planning to relocate more than 500,000 jobs offshore - representing eight percent of their workforce - over the next five years, according to a study conducted by the financial services practice of global management consulting firm AT Kearney.

The relocations will involve a wider range of high-end internal functions than have typically been slated for overseas transfers, including financial analysis, research, regulatory reporting, accounting, human resources and graphic design, and are expected to reduce annual operating costs by more than $30 billion, the AT Kearney study finds.

The study was conducted with approximately 100 financial services firms in the banking, brokerage and insurance sectors. It follows recent research by Deloitte Consulting which forecast moves by the world's top 100 banks to shift two million jobs to lower-cost offshore centres.

"Any function that does not require face-to-face contact is now perceived as a candidate for offshore relocation," says AT Kearney managing director, Andrea Bierce. "The debate at major financial services companies today is no longer whether to relocate some business functions, but rather which ones and where."

Still, Bierce cautions that while the trend toward offshore outsourcing has accelerated in recent years, the research indicates that the effectiveness of these moves is far from certain. Fifty percent of the survey's respondents classified the results of their offshore initiatives as being only "somewhat effective" or "too early to tell".

"It's clear that some financial services companies have experienced formidable challenges deriving all the benefits they hoped to achieve from their offshore initiatives," Bierce says. "Although 50% cost reduction can be achieved in many instances, companies need to manage the process transition effectively and establish metrics in the beginning so they can measure the overall effectiveness."

Despite the perceived complexity, the research indicates that 64% of the financial services firms surveyed have already begun to implement offshore business process initiatives.

Using a proprietary scoring methodology, AT Kearney ranks India as the preferred country overall for offshore business processing, followed by Canada, Brazil, Mexico, Philippines, Hungary, Ireland, Czech Republic, Australia, Russia and China.

Although India will likely maintain its lead as the offshore data processing centre of choice for the next several years, China is expected to become an increasingly popular location once US financial services firms have the necessary confidence that their intellectual property rights will be safeguarded.

The study also finds that firms are increasingly looking to limit their exposures to geopolitical risk and disaster recovery issues by maintinaing multiple overseas locations.
KeywordsOUTSOURCING

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Banks to shift more business to offshore centres

Banks to shift more business to offshore centres

10 April 2003  |  4692 views  |  0 comments
Impact of offshore outsourcing goes beyond cost cuts - TowerGroup

Impact of offshore outsourcing goes beyond cost cuts - TowerGroup

13 March 2003  |  4188 views  |  0 comments

Related blogs

Create a blog about this story (membership required)
visit www.niceactimize.comvisit www.atos.netvisit www.aciworldwide.com

Top topics

Most viewed Most shared
Deutsche Bank paper hails 'huge' blockchain potentialDeutsche Bank paper hails 'huge' blockchai...
10200 views comments | 16 tweets | 25 linkedin
satelliteRipple completes XRP Lockup
9363 views comments | 3 tweets | 2 linkedin
PSD2: Laying the regulatory foundation for a new age in paymentsPSD2: Laying the regulatory foundation for...
8951 views comments | 17 tweets | 36 linkedin
Alior Bank to use Open API platform and accelerator to create fintech marketplaceAlior Bank to use Open API platform and ac...
7595 views comments | 20 tweets | 11 linkedin
Australian Government amends AML rules to cover digital currenciesAustralian Government amends AML rules to...
7225 views comments | 15 tweets | 24 linkedin

Featured job

Competitive
Germany, Austria or Switzerland

Find your next job