Outsourcing in financial services is increasing year over year, according to results from two surveys. The surveys also indicate that offshoring is increasing due to cost savings and quality of work.Offshoring is saving the financial services industry an estimated $9 billion each year. This number is up from an estimated $5 billion a year ago, propelled by a 1,800% increase in headcount in lower-cost countries over the last four years, according Deloitte Touche Tohmatsu's fourth "Deloitte Global Financial Services Offshoring Report."

The industry's savings rose exponentially from about $500 million in 2003. The average number of staff employed offshore has increased from 150 to 2,700 in just four years.

More than 75% of major financial institutions now have operations offshore, compared to less than 10% in 2001, according to the Deloitte report.

Survey results from Bermuda-based Accenture are consistent with the findings from New York-based Deloitte, but organizations are becoming more interested in quality. The vast majority of respondents to Accenture's "IT Outsourcing in the Financial Services Industry" survey, say their outsourcing arrangements meet or exceed expectations in such areas as cost savings, quality, supplier flexibility and transparency. However, among those who would have acted differently in choosing a supplier had they the chance, 28% say they would have selected a higher-quality vendor even if more expensive-more than five times the 5% of respondents who say they would have opted for a less-expensive vendor, even one of lower quality.

The majority of offshoring customers use vendors in India, and will keep doing so for the next three years, according to Accenture's report. India could lose some of the financial services business to China in the next few years, according to Deloitte and Accenture.

For 57% of Accenture's respondents, India will be the top overseas destination over the next three years for the outsourcing of applications development and maintenance. Second on the list is China, cited by 28% of respondents.

Register or login for access to this item and much more

All Digital Insurance content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access