Datamonitor forecasts increasing performance in core financial services functions – such as mortgage processing, insurance underwriting, claims processing – to be outsourced to alternative offshore locations.
The current shift, in terms of business process outsourcing (BPO) sourcing strategies in financial services, is enabled by a growing number of outsourcing service providers and IT services vendors having a credible global delivery capability, an ongoing simplification of the outsourcing process from the FSI point of view and improving industry specific expertise among the service providers.
Thus, financial services institutions (FSIs) need to develop global sourcing strategies that enable them to choose between operational locations and sourcing set-ups in accordance with their strategic objectives, weighing up a number of factors such as political and operational risk, regulatory issues, cultural barriers, cost considerations, vendor offerings and local skill sets, according to the Datamonitor report.
“Offshoring of core competencies amongst financial services institutions in Europe and North America is increasing as confidence in the offshore markets – be it via vendor or an in-house offshore operations – is improving rapidly,” says Anders Maehre, financial services Technology analyst at Datamonitor and author of the study “Global sourcing in European and North American Financial Services.”
A global sourcing strategy is the dynamic use of distributed global resources in accordance with a balanced view of these issues across FSI functions – not just the offshoring of certain individual tasks. The crux of a global sourcing strategy, as Datamonitor sees it, is the awareness of global and regional sourcing options and actively making sourcing decisions about all business functions, rather than using internal resources or resources in a certain location as a default position.