Does the Natwest service collapse indicate the true cost of Offshoring?

I have just been reading allegations on Guido Fawkes (midway down the comment stream below a picture of Osborne greeting one of the EU’s prettier finance moinsiters) that the failed software upgrade which caused the systems problems at Natwest was a direct result of transferring batch mainframe maintenance to India. If that is correct, it will prove to have been one of the most expensive cost cutting programmes ever. It is not just the short term customer suffering and consequent compensation claims but the loss of confidence.

The “know your customer” requirements that get in the way of banking competition in the UK will prevent an immediate flight of business to those who still retain such operations within the UK (who?) but others will fear that other banks are now similarly vulnerable and this was typical of the accidents waiting to happen. As it is we will have a dent in confidence in the UK financial system and a ritual hand-wringing that will probably add another layer of unnecessary regulation.

The real lesson is, however, to do with the consequences of running down the UK IT skills base.  

Enhanced by Zemanta