Finance firms to outsource to India in a big way

By siliconindia   |   Monday, 19 April 2004, 19:30 IST
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WASHINGTON : Tower Group, a research and consulting firm, expects big push to outsourcing by global financial institutions in countries like India and China . Outsourcing in financial industry is undoubtedly on the rise... top 15 global financial institutions will increase information technology spending on vendor-direct offshore outsourcing by 34 per cent annually representing an increase from USD 1.6 billion in 2004 to USD 3.89 billion in 2008, Tower Group said in its latest report. If outsourcing is executed properly, resources no longer bogged down by maintenance and IT work will be able to address the backlog of IT projects intended for competitive differentiation, said Virginia Garcia, senior analyst in the Financial Services Strategy & IT Investments practice at Tower Group and the author of the research. Maintenance costs will go down and more money will be available to innovate. Firms that do not view offshore outsourcing as an opportunity to do more not less are missing the boat, it said. Most of the top 15 global financial institutions are already outsourcing some parts of IT to offshore destinations, many through specialised offshore vendors, it said. Additionally, many leading firms now own and operate their own captive sites in countries like India or China , which allows for better risk management and IT governance and thus a more confident transfer of riskier IT and business processes to low-cost destinations.