Chillin' out till it needs to be funded
the major banks are clearly the most aggressive with ramping-up their plans to pursue outsourcing strategies:
Figure 1: Over the last month, has your firm been looking to increase / decrease your expenditure on outsourcing services IT and BPO?
n= 44 Major US Financial Institutions
It is those outsourcing services where initial investment outlays can be offset by a heavy labor arbitrage component that are now top of the agenda for the beleaguered banking sector.
To this end, the main service-lines where banks are focusing are banking-specific BPO services, application outsourcing, and Finance and accounting BPO see Figure 2. Insurance companies also stated a strong focus on adopting insurance-specific BPO services in a 6-12 month period. Service lines not being so aggressively pursued are primarily HR outsourcing and IT staff augmentation projects:
Figure 2: How do you foresee your demand changing for the following outsourcing services over the next 6 months?
n= 29 Major US Banks
“Tough times call for tough measures, and outsourcing fits the bill for some financial organizations”
This data supports the position that banks are now seriously evaluating the lower-hanging fruit right now – they are looking to find solutions that can support their changing business models, and the more they can be supported by cost arbitrage, the more likely they are to move into an outsourcing transaction.