Insurers Increase Outsourcing Activity

Dallas — Insurers increased outsourcing spending during the past two years, as evidenced by a wave of new outsourcing contracts, reports Alsbridge Inc., a Dallas-based consulting firm.

The increase has been across the board in functional areas, including BPO, IT, F&A and HR. The engagements involve the vast majority of large insurance companies and outsourcing providers. Many of the engagements are entering the second and third generation of agreements.

Ben Trowbridge, CEO for Alsbridge, sees mergers and acquisitions as being major factors in the move to outsourcing. "With wider product offerings and geographies, insurance companies need to standardize processes involving disparate systems. Outsourcing will accelerate consolidation," he says.

According to the article, the softening economy has driven the move to outsourcing to reduce costs, improve efficiency and consolidate infrastructure. Unlike the response to the economic downturn several years ago when outsourcing was less accepted, the strategic potential is now more fully understood.

This wave also has seen large companies tap the offshore market directly. Alsbridge’s research indicates that a number of insurance companies have, in addition to outsourcing, opted to create offshore centers where they hired local employees to access lower cost labor.

Source: Alsbridge Inc.