Financial services companies are currently capturing less than one third of the potential cost savings offered by offshoring operations, according to a study by Deloitte Touche Tohmatsu.

The study found that the most effective offshorers among financial institutions have 6.7 percent of their global headcount offshore, well ahead of the study average of 3.5 percent. If all surveyed companies were to reach this headcount ratio, they could reduce their collective annual cost base by $16 billion -- more than tripling their current reported savings of $5 billion.

The Deloitte report argues that too many financial services companies remain less than fully committed to offshoring, and therefore may not reach this higher ratio.

"Offshore operations that aggressively expand their scope and scale typically deliver much higher returns," said Chris Gentle, a director at Deloitte Research and author of the study, in a statement. "Financial institutions that make a half-hearted attempt at offshoring are exposed to all of the risk, while enjoying only some of the benefits. The message is clear: Don't dabble -- stay home if you're not committed."

The study concluded that expanding both the scope and scale of offshoring operations is key to realizing maximum savings, but also found that many companies encounter a steep drop-off in cost savings and quality after the third year.

The full report, which is Deloitte's third annual offshoring study, is based on interviews with 62 global financial services institutions based in 12 countries. Of the 62 institutions surveyed, 33 are currently operating offshore, nine are making plans to offshore and 20 currently remain purely onshore. The report is available at www.deloitte.com/us/fsi.

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