Strategic CIO // IT Strategy
News
9/15/2005
04:55 PM
Connect Directly
RSS
E-Mail
50%
50%

Financial-Services Firms To Double Offshoring In Three Years: Survey

Low-value IT activities such as infrastructure management already are being sent offshore by 42% of those surveyed, with another 17% to do so during the next three years.

Financial-services firms are expected to double the number of jobs located offshore within the next three years as they attempt to reap cost savings, according to a survey released Thursday By PricewaterhouseCoopers.

The survey of 156 senior executives in the financial-services industry shows that a quarter of the survey participants now offshore between 10% and 20% of their employee workforce; that's expected to rise to nearly half in three years.

Cost savings was cited by 79% of participants as the most important benefit of offshore outsourcing, followed by strategic flexibility (33%) and greater focus on core competencies (28%).

Lower-value IT activities such as infrastructure management are being sent offshore by 42% of the survey participants, and another 17% plan to offshore such activities within the next three years. Higher-value activities such as applications and services are being sent offshore by 34%, with another 23% planning to send those tasks offshore in the next three years.

The trend is toward transferring more higher-value operations offshore, especially to countries such as India and China. ABN Amro earlier this month tapped five vendors for its most strategic IT work -- application development. ABN Amro will contract with Accenture, IBM, and Indian firms Infosys Technologies, Patni Computer Systems, and Tata Consultancy Services as preferred vendors for app-development services.

The offshore operating model of choice is the captive venture -- an operation that's majority-owned by the offshoring institution. This preference is most marked for activities such as financial research and modeling that require a degree of specialist knowledge, involve confidential information, or relate to core activities. Such activities are more than four times as likely to be outsourced to a captive operation than to an independent vendor.

Comment  | 
Print  | 
More Insights
Transformative CIOs Organize for Success
Transformative CIOs Organize for Success
Trying to meet today’s business technology needs with yesterday’s IT organizational structure is like driving a Model T at the Indy 500. Time for a reset.
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Tech Digest - July 22, 2014
Sophisticated attacks demand real-time risk management and continuous monitoring. Here's how federal agencies are meeting that challenge.
Flash Poll
Video
Slideshows
Twitter Feed
InformationWeek Radio
Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.