New York (April 23, 2003) - In an effort to significantly reduce costs, the world's 100 largest financial services companies expect to transfer up to $356 billion of their operations and two million jobs offshore over the next five years, according to a recent Deloitte Research survey.
The world's leading financial institutions can reduce their costs nearly $1.4 billion each by 2008 if they send work to low-cost centers like India, the survey found.
Thirty percent of the respondents currently have existing offshore operations. That percentage is expected to climb to 75 percent within two years, according to the survey, which also suggests that the firms achieve a 39-percent cost savings from moving operations to these low-cost centers.
The survey also shows that banks and insurance firms are transferring offshore such functions as application development, coding and programming, accounting and finance, processing and administration, and customer support.
The Deloitte study also found:
● The offshore trend is driving a radical shift in the structure of the global financial-services industry.
● Financial institutions that can utilize their existing offshore facilities expect significant future savings because they leverage offshore scale and scope.
● Firms aspiring to move offshore should move quickly to capture the benefits of doing so, but the challenge is building capabilities quickly and prudently.
● Companies that don't move offshore risk being left behind as those moving offshore estimate future cost savings of nearly 45 percent.
In addition, nearly 50 percent of financial services firms transferring functions offshore are targeting India, which has a huge market of IT professionals who earn much lower wages than anywhere else. Ireland and South Africa are also attractive offshore centers, with China, Malaysia, and Australia growing in popularity, according to the study.
-- WebCPA staff
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