WASHINGTON: Business consulting firm A.T. Kearney Inc. has released a survey of 100 major American banks, brokerage houses, and insurance companies, projecting that half a million financial services jobs will be shifted overseas in the next five years, equal to eight percent of total employment in the sector. The practice of outsourcing may be catching on among financial services and business consulting firms for the same reason that computer software companies such as Microsoft Corp. and IBM Corp. are increasing their use of overseas labour. Countries like India offer sharply lower labour costs, while supplying workers with excellent technical and financial know how. For instance, in 2001, MBA graduates from the prestigious Indian Institutes of Technology could expect to earn just $12,000, compared to an average starting salary of $102,338 for graduates of Harvard Business School. New York-based JP Morgan said the analyst research reports it prepares for stock investors will soon be prepared in part by Indian business school graduates working in Mumbai. According to the Globe report, JP Morgan Chase spokesman Brian Marchiony said his company was not laying off American analysts to hire Indian MBAs. Instead, the Indian workers will do heavy-duty number crunching, freeing up Americans to focus on higher-level financial analysis, and letting them spend more time with customers. "We will not only increase productivity for senior analysts inside the U.S., but lower costs for the overall department," Marchiony said. A.T. Kearney said it is already having much of its research done by Indian workers. "We're talking about very highly educated people with advanced degrees, who are very motivated," said A.T. Kearney managing director Andrea Bierce. For decades, financial services companies like Citigroup and GE Capital have shifted some of their business activities overseas. But traditionally this has involved relatively low-level work, such as typing huge volumes of data into computers or handling simple bookkeeping activities. That trend has accelerated in the past five years as companies have sought to lower their costs to remain competitive, the Globe report said. But the move toward sending financial research abroad comes at a sensitive time for Wall Street. Last week, 10 top investment banks firms reached a $1.4 billion settlement with regulators aimed at protecting investors from biased research. It was unclear whether the settlement would speed the outsourcing of analyst work overseas. Beginning about a year ago, A.T. Kearney moved much of its own research to India. "One (reason) was as a way to reduce our overall costs," said Bierce. "But two, we could take advantage of the time change." Bierce said she can e-mail a data request to an Indian colleague who's at work while she's at home. The next morning, the information is waiting in her e-mail box. Another research firm, Deloitte Consulting, said the financial outsourcing boom isn't limited to the U.S. Last month Deloitte analyst Christopher Gentle predicted that financial firms in major industrialised nations would move two million jobs to low wage countries over the next five years, with about half the jobs going to India. Gentle estimated that the shift could save the world's 100 largest firms $138 billion a year by 2008.
Source: IANS