Growth in offshoring predicted

Offshore outsourcing in financial services is expected to rise significantly in the next three years, according to research by PricewaterhouseCoopers.

The most popular area is lower-value IT activities, such as infrastructure management, which 42 per cent of respondents have outsourced offshore. A further 17 per cent plan to do so in the next three years.

Higher-value IT tasks, such as applications and services, are becoming increasingly popular, with one-third of firms offshoring these functions.

‘For all operationally driven activities, we have to ask ourselves: “Why are we doing it here, and could we get more value for money doing it in an offshore location?”’ said Andrew Robinson, head of ABN AMRO’s offshoring centre of expertise, in the report.

But only half of the 156 executives polled for the survey say they are satisfied with the overall impact of offshore outsourcing, citing issues with cost overruns and recruiting and retaining staff.

Firms say cost-cutting is the overriding reason they outsource, but nearly a third of respondents experienced an increase in costs in the first year. Fifteen per cent reported no change in costs even after five years offshoring.

The report suggests 35 per cent of firms expect to offshore at least 10 per cent of their staff numbers in the next three years, compared with 20 per cent that do so today.

One in five firms polled do not offshore any workers, but just six per cent expect this to be the case by 2008.