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“$356 billion worth global financial services cost base will be offshored to India” reports visiongain |
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NewsreleaseDate:
2004-11-16
San Francisco, CA and London, UK; 16 November 2004 - visiongain
Visiongain's latest financial report 'Outsourcing to Asia' analyses the insight into offshore outsourcing in the global financial market. With companies downsizing and cost saving, the trend of outsourcing to Asia has been an option that many companies have chosen to take. Difficulties with the managing staff abroad, along with consumer groups, main concerns lie with how much of a service can be provided through another country.
It is anticipated that $356 billion worth global financial services cost base will be offshored to India, over the next five years. Approximately 15% of the $2.34 trillion cost base for the top 100 financial institutions globally. According to this 15% estimation, 2008 will see the migration of over two million jobs out of the 13 million employed in the financial services sector. This is expected to produce a cost saving of around $138 billion for the top 100 financial service firms, a cost saving of approximately $1.4 billion each.
The perceived benefits of this are uncertain but many corporations are still choosing to do so. Considerations need to be made with the future of financial services outsourcing to Asia and the political and economic repercussions this may pose for both the domestic offshore communities. Payroll proves to the most commonly outsourced function, chosen by 27% of survey respondents. Budgeting and forecasting is at the other end of the scale, with 85% saying they had no intention to outsource and only 1% already having done so.
While each company's shareholders demand growth, in contrast to the industry's ability to generate return on capital employed, outsourcing may be the best and most effective solution. It is questionable what are the core competencies that organisation cannot outsource. If outsourcing is the solution, where in Asia will best suited and what are the key factors when considering outsourcing to the Pacific Rim
“Asia provides other cost-cutting incentives. Real estate in Bangalore is about a sixth of the price in Tokyo, a third of Singapore and New York prices and 20% of those in the city of London when comparing average grade A office space”, says Rhian Edwards, visiongain’s financial analyst. Bangalore office rents average about $111 per square meter a year, rent in Mumbai about $334 per square meter. That compares to $934 in the city of London. Office space in Mumbai and New Delhi is similarly priced to Singapore.
The outsourcing of functions, such as call centres, claim adjusters, mortgage processors, financial analysts and non-core accountancy functions, is gaining momentum at an accelerated pace within the financial services arena. “This year alone, it is anticipated that outsourcing will have increased up to 40% and will continue to do so at an equivalent rate for the next five years”, predicts Edwards.
Given the controversy surrounding this topic, ranging from the consumer uproar to outright political opposition, outsourcing is a strategic vehicle that cannot be ignored. Financial divisions or institutions that are looking to slash costs, that have not yet explored the option to outsource, particularly offshore, will need to determine if it is beneficial before committing to such a decision.
Therefore, a symbiosis occurs whereby in order to address the immediate competitive needs of the indigenous economy, the market must cut costs and render job losses onshore. The most immediate cost effective solution of executing this is by transferring these jobs to less mature economies offshore. This does not only boosts the offshore economy by the mass generation of employment, it also panders to the domestic economy.
Given the radical increase in outsourcing to Asia within the financial arena and its dramatic surge in popularity amongst the prominent financial moguls. It is difficult to determine if the paramount of this benefit stems from the fact that shifting non core business and back office tasks offshore, enables managers to concentrate on more value-added undertakings, such as business planning, forecasting and analysis, and less on generic administrative tasks. This furthers cost savings in that it ensures that more senior staff is more meaningfully and cost effectively employed.
If you are interested in an overview of Financial Outsourcing to Asia - Please send an email to Ms.Senh Ip - Corporate communications at - Senh.ip@visiongain.com including: Full name, Company name, Title, Contact Tel Number, Fax and Email. Following this information, an overview will be emailed to you.
ENDS
Background:
Visiongain is a business intelligence provider of analytical information to corporate organisations to deliver market insights to help create growth through innovative approaches. visiongain products and services specialise in market research and data material and expanding in Pharmaceutical consultancy.
Business information is provided for to a range of global markets, namely Pharmaceuticals, Telecommunications, Finance, Defense and many more to come. Visiongain produce material using a wide range of media formats suited to the customer’s requirement, these formats are newsletters, E-zines and management reports.
b2b Conferences, visiongain's event division, targets industry professionals who need to keep updated on current affairs within their market by producing industry related conferences and workshops. b2b conferences also work in tandem with the management reports department to provide a forum to network and discuss the key issues for senior level professionals within the Telecoms and Pharmaceutical professionals.
For more Finance information, please contact our website on: www.visongain.com/finance
For information on visiongain, please visit the website: www.visiongain.com
For additional information contact:
Ms. Senh Ip
visiongain publishing
40 Tooting High St,
London SW17 ORG, UK
Tel: +44 (0) 20 8767 6711
Fax: +44 (0) 20 8767 5001
Email: Senh.ip@visiongain.com
www.visiongain.com/finance
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