Banks and financial services companies prefer offshore outsourcing
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Banks and financial institutions continue to struggle amidst the global economic slowdown. And as these organizations try to find a way to minimize costs, they look into outsourcing some of their back-office operations. A report from the UK’s Management Consultancies Association (MCA) and British Bankers’ Association (BBA) found that “the credit crunch will drive a new wave of outsourcing and offshoring in financial services as cash becomes tighter”. Contradicting some of the negative publicity often associated with outsourcing, the MCA and BBA’s report found that 89% of the survey’s respondents do not believe that jobs in their organizations have been lost due to outsourcing or offshoring, and about 58% think outsourcing made their organizations more competitive.
Interestingly, the MCA and BBA survey of about 70 organizations in the financial services sector also found that over 90% of financial services organizations had outsourced almost a third of some of its business processes and 90% stated that outsourcing is now an accepted way of doing business. Andrew Stewart, Head of Financial Services Europe, Navigant Consulting said “Outsourcing is now an acceptable part of the armoury of business executives. Five years ago it was either seen as an admission of defeat or a wild and wacky option, now nearly everyone has done something.”
Changes in the financial services outsourcing industry have occurred more rapidly compared to other industries because of its dynamic nature. Last week, SunTrust Banks Inc. signed a 10-year agreement with Symcor Inc., a Canadian BPO company that caters to the financial services industry, to outsource a portion of the bank’s back-office operations. Symcor Inc. also provides back-office services to 5 of the 15 largest North American banks.
With rapid advancements in information technology, the financial services outsourcing industry is undergoing massive automation over the years. Financial projects are still being handled by highly qualified professionals, but transaction processes is now being done by automated software systems. This is a positive development since automated systems eliminate human errors and inaccuracies, allowing outsourcing companies to handle large financial projects without worrying on transaction processes.
Exigen Services, the leading provider of next-generation application outsourcing, completed a comprehensive system overhaul for a major financial services firm last July. Armin Roth, Exigen’s Western Europe country manager, said that “IT spend is not the issue, clearly, as the financial industry accounts for more than 50 percent of all IT expenditures worldwide. Intelligent outsourcing is what the industry craves. It needs providers who align contractually, understand the industry and use iterative methods such as Agile to improve IT quality and delivery times”.
Aside from cost savings and automation of processes, banks and financial companies prefer outsourcing because of the vast talent pool in offshore locations. “Finding people having the right qualifications is not a problem because some prominent outsourcing locations such as India produce thousands of qualified MBAs and CFAs every year, making it easier for outsourcing firms to hire them. These professionals can work within the arena of financial research, which in itself is comprised of different internal activities”, reports Call Center Café.
Before, financial services outsourcing was limited to a few outsourcing locations such as India. However, due to increasing demand for financial services, countries like Brazil, Russia, China, Philippines, and Indonesia have also started offering financial services outsourcing. This is good for banks and other financial institutions because now they have more offshore outsourcing locations to choose from.
Author: Kim G.
Tags: KPO
April 23rd, 2010 at 2:45 am
I believe that offshore outsourcing has really helped revive a lot of businesses amidst the slow down during recession. And to add, outsourcing such as KPOs, BPOs, LPOs and etc., have been a big help as well to those who have been laid-off for work during those hard times. Many people nowadays have been continuously relying on offshore outsourcing, as well as the net to get by their tasks, among them are services and e-banking.