Offshoring will save the financial services
industry an extra £2bn this year, according to a
Deloitte report.
According to the latest Global Financial Services Offshoring
Report by Deloitte
offshoring is saving the financial services industry an
estimated £4.5bn a year, compared to £2.5bn a year ago. This is
being fuelled by higher foreign headcounts.
The UK financial services industry alone now saves up to £1.5bn
a year from offshoring.
The industry’s savings have risen exponentially from around
£250m globally in 2003, as the average number of staff employed
offshore has increased from 150 to 2,700 in just four years.
Over the last year alone, this has led to the average proportion
of group headcount in lower cost countries doubling from 3% to
6%.
Over 75% of major financial institutions now have operations
offshore, compared to less than 10% in 2001.
UK and
US banking and capital market institutions are leading this
shift, but mainland Europe is showing increasing interest.
Deloitte’s research finds that more than half of all financial
institutions are now saving more than 40% against their onshore
costs for every business process offshored. In 2004, the figure was
just 32%.
Chris Gentle, associate partner of financial services at
Deloitte, said, “Offshoring is maturing at a rapid pace but, in
future, the best offshoring strategies will not, and cannot, be
based on labour arbitrage alone.
“Financial institutions need to re-engineer business processes,
or risk simply transferring offshore the legacy inefficiencies of
older, onshore processes.”
Financial institutions offshoring one or two business processes
are saving 20% less, on average, than companies with over five
business processes offshore.
IT outsourcing: the expert view >>
Deloitte: Global Financial Services Offshoring report
>>
Comment on this article:
computer.weekly@rbi.co.uk