In the medium-to-long term, the sub-prime crisis will accelerate global sourcing adoption as financial institutions push the envelope on offshoring to cut costs, according to the Everest Research Institute. The Institute predicts BPO (Business Process Outsourcing) from the financial services sector has the potential to increase 40-45 times the current market size over the next five years, with key drivers of growth coming from cost pressures and the timely advent of more vertical-specific offerings by offshore suppliers, according to the Institute’s study, Global Sourcing in Banking, Capital Markets and Insurance.
Within five years, the Institute projects that the addressable opportunity for global BPO by the financial services sector will reach US$145-165 billion for India-based services, the hub of global sourcing for financial services. The report also projects offshore BPO adoption in the insurance sector will grow 12-15 times during the same time period.
“The current financial crisis in the U.S. markets is accelerating interest across stakeholders to understand adoption trends and opportunity areas in offshoring, among other cost containment measures,” said Nikhil Rajpal, Vice President, Global Services of Everest Research Institute. “Banks and other financial services firms are under significant cost-reduction pressure, which is why a large number of firms plan to reduce headcount in Western geographies and move jobs offshore.”
The financial services industry, comprised of banking, capital markets and insurance, is the leading adopter of offshoring services and accounts for 40-45 percent of worldwide global sourcing.