Financial services organisations are starting to embrace a sophisticated global sourcing model, covering multiple suppliers, geographies and vertical, business-specific processes.
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Research from London Business School and consultancy Capco has found that 58% of large financial services businesses are using some combination of outsourcing and offshoring, in many cases for core or business-specific processes.
The study also revealed that many firms are no longer afraid of managing multiple suppliers to meet specific process needs. Almost 25% of respondents said they were using an in-house and outsourced, multi-supplier, multi-location model for sourcing their IT and business process needs.
And this approach was accepted even more widely as the best strategy for the future: 60% of financial services firms said that evolving and effectively managing such a strategy would leave them better placed to benefit from global sourcing options, while limiting or avoiding the main risks posed by the sourcing process.
The research, which covered 62 financial services organisations, including 35 headquartered in the UK, found that the most cited offshoring risks or “pain points” worrying firms were:
● Resistance from process owners within the business
● A lack of cultural fit with an offshore partner
● Scepticism from top management
● Being hit by hidden costs.
However, firms do not appear worried about the dangers of attracting negative press for offshoring. Only 8% described this as a very significant factor in making offshore decisions.
Phanish Puranam from London Business School, who co-wrote the survey, said it showed that financial services organisations were doing what the manufacturing sector did years ago – breaking up the supply chain and breaking free of geographical and organisational boundaries.