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Financial services firms predicted to spend £7bn on outsourcing by 2005

European financial services firms will spend more than $12bn (£7.2bn) on outsourcing services in 2005, driven largely by business...

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Outsourcing

European financial services firms will spend more than $12bn (£7.2bn) on outsourcing services in 2005, driven largely by business process outsourcing deals, according to new research from Datamonitor.

The analyst firm said the BPO market is one of the fastest growing segments in European financial services technology, as companies continue to try and cut costs and improve operational efficiency.

A number of large organisations have signed BPO deals in recent months, including Procter and Gamble and Thames Water.

However, although service providers promise significant savings with BPO, analysts suggest customers may be disapointed.

Forrester Research recently warned IT managers that companies are exaggerating their capacity to offer end-to-end business process outsourcing services.

Forrester surveyed 82 senior IT executives and had in-depth interviews with 12 BPO early adopters, and found that BPO suppliers are not matching expectations.

Forrester highlighted difficulty in measuring the provider's performance and strained interaction with the service provider exacerbated by inflexible contracts.

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