Huge rise predicted in financial service outsourcing

Financial services companies are set to rapidly increase the amount of mortgage processing, insurance underwriting, and claims...

Financial services companies are set to rapidly increase the amount of mortgage processing, insurance underwriting and claims processing they outsource to offshore locations, analyst firm Datamonitor has predicted.

The increase in outsourcing such processes comes after the well established route of outsourcing contact centres and application services.

Datamonitor’s report, Global Sourcing in European and North American Financial Services, says North America and the UK  “remain significantly more advanced than continental Europe”  when it comes to outsourcing core business services.

The report adds that for financial services companies to be successful in their offshore expansion programmes, they need to develop global sourcing strategies that enable them to choose between operational locations and sourcing set-ups in accordance with their strategic objectives.

They must weigh up a number of factors such as political and operational risk, regulatory issues, cultural barriers, cost considerations, vendor offerings and local skill sets.

Anders Maehre, a financial services analyst at Datamonitor, said, “Offshore outsourcing has gathered tremendous pace in recent years. Political pressure and controversy has done little to deter top-line growth.

“The improving credibility of many of the offshore providers and increasingly global delivery capability of the leading outsourcing service providers will push financial services companies in both North America and Europe towards intelligent use of global resources.”

The Datamonitor report is based on interviews with 400 key financial services staff.

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