Global Business Process Outsourcing in the financial services sector has the potential to reach a market size of $250 billion, with India playing a key role, says a study by global consulting and research firm Everest Group. The financial services BPO (FS BPO) sector is a $16-18 billion market comprising nearly 40 percent of the $40 billion global sourcing market. The report titled ‘Role of global sourcing in financial services BPO’ states that India, Philippines and China are all mature locations for FS BPO and countries in Eastern Europe, Central America and South America are witnessing the fastest growth in the segment. “India continues to play a key role in the FS BPO space and offer attractive arbitrage opportunities compared to onshore locations in U.S., UK, and Europe,” says Vikash Jain, Everest Group Partner.

Besides cost arbitrage, the attractive factors for India in this sector are availability of highly talented workforce in financial services, risk diversification need by buyers, process excellence, and improved service levels. “Despite challenges, such as constraints in the U.S. associated with the Troubled Asset Relief Program (TARP) and data protection measures in the European Union, the impact on global sourcing has been minimal,” says Rajesh Ranjan, research director and co-author of the report.

The report also said that banking BPOs account for nearly 50 percent of the overall scale of global sourcing operations within FS BPO. The capital market is the fastest growing segment, with an annual growth of 40 percent in the 2009-10 financial year. The study analyzed the global sourcing phenomena across banking, capital markets, and insurance segments and also analyzed labor savings and other factors offered by different near-shore and offshore delivery locations.