Banks see benefits in IT offshoring

Research by consultancy frim Deloitte reveals 62 of the world`s leading banks and insurance firms could collectively reduce annual overheads by as much as $16 billion by offshoring IT development, servicing and call centres, reports vnunet.com.

Financial services firms are finding a project can be carried out in India for 40% to 60% of the cost of one in the UK, says Deloitte.

Martin Hart, chairman of the National Outsourcing Association, says, "IT is a fundamental part of the financial services industry these days. They rely on everything from Web sites to CRM systems."

Siemens Business Services (SBS) has renewed three service contracts with Bankgesellschaft Berlin and Landesbank Berlin, reports ovum.com.

The contract was originally signed in 2001 and has now been renewed for five years. SBS will manage voice and data networks, servers, desktop and telecommunications systems.

Questions remain, however, around SBS`s ability to provide profitable delivery (given the losses it continuously reports) and as to the types of services it is contracted to deliver. The majority of services under this deal are basic infrastructure and support services, and SBS has not been able to up-sell more profitable BPO services.

Outsourcing providers will increasingly institute standardised services as they try to generate better profits from their deals, according to research firm Gartner.

Gartner research VP Jim Longwood said dwindling margins in the local and global market is forcing outsourcing firms to reduce their commitment to offering unique or unusual services as they do in current engagements.

Gartner predicts more than 50% of new outsourcing deals will include IT utility service components through to 2008 and more than 70% of new application utility offerings will be targeted at business units or line managers, rather than IT organisations, reports TechNews.

The business process outsourcing (BPO) trends for the Asia/Pacific excluding Japan (APEJ) market will experience a moderate growth from 2006 to 2010, predicts market analysis firm IDC.

BPO in 2005 totalled $6 billion and this figure is forecast to rise to about $14 billion by 2010 at a compound annual growth rate of approximately 18%, reports tekrati.com.

"Even though APEJ is a main centre for BPO, majority of the contracts will still be derived outside of the region, mainly from the US and Western Europe. Local adoption will be more opportunistic," said Conrad Chang, IDC`s senior market analyst for Asia/Pacific BPO services.