Skills need changing as banks adopt multisourcing

Commercial and supplier relationship skills are likely to become as important as technical expertise in the next few years for many IT professionals in financial services, according to industry experts.

Commercial and supplier relationship skills are likely to become as important as technical expertise in the next few years for many IT professionals in financial services, according to industry experts.

With international banks increasingly adopting sophisticated global sourcing models covering multiple suppliers, geographies and processes, retained IT staff in banks will become managers of supply and demand for outsourced technology contracts, rather than working as pure IT specialists.

"Many retained IT staff working in financial services will need to learn to become service integrators," said Robert Morgan, chief executive of outsourcing consultancy Morgan Chambers.

"Those with an affinity for building relationships and motivating others will be in greatest demand. The most successful staff will most likely be open, gregarious and have a good commercial or possibly legal background. Traditional IT skills will not be enough."

Peter Vermeulen, research manager at analyst firm IDC, said the growing complexity of the financial sector's business requirements meant that the number of employees needed to manage service level agreements was on the increase.

This is backed up by analyst firm Gartner, which found that the proportion of spend that goes on retained staff in a multisourcing context is typically between 5% and 7%, whereas in more traditional outsourcing contracts with a single primary supplier 3% to 4% of the budget goes on retained staff.

Vermeulen added that most application development and other programming work was likely to move offshore as banks come to rely more on suppliers for their programming and testing needs. But he said some firms would retain an in-house application development capability to take on more speculative or innovative work.

In recent months two leading European banks, ING and ABN Amro, have announced major strategic transformations in the handling of their IT, swapping in-house application development and maintenance work for large-scale multisourcing arrangements, and others are expected to follow suit.

Research from London Business School and consultancy Capco found that 58% of large financial services businesses use a combination of outsourcing and offshoring, sometimes for core or business-specific processes.

The study also found that many banks manage multiple suppliers to meet specific process needs, with nearly 25% of respondents already using a multi-supplier, multi-location model for sourcing their IT and business process needs.

See also: Technical skills offer way in to finance


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