Offshore outsourcing looks set to continue growing as financial services institutions remain focused on efficiency as their main driver of IT strategy, according to Datamonitor.
The expansion of offshore outsourcing services in the European financial services market will continue growing at a compound annual growth rate (CAGR) of 18% between now and 2005, said Datamonitor in research called Benefiting from Offshore Outsourcing in Financial Services.
To date the offshore opportunity has been limited to a few areas such as application development and maintenance, and more recently in contact centre outsourcing. Going forward, the continued focus on cost-effectiveness of financial services institutions will drive growth in new business process outsourcing (BPO) areas.
The barriers to offshore outsourcing, however, are likely to affect these new operational services more severely than the traditional offshore services.
Offshore vendors have aggressively captured market share in a period of extreme cost focus in the financial services industry and are increasingly looking to provide new services to sustain this growth, said the research.
In doing so, the vendors will have to address the primary concerns of European financial services institutions and work with some of the largest offshore vendors already developing an onshore presence. This will aid offshore vendors to develop closer customer relationships and provide more responsive and accountable services.
According to Datamonitor, some of the vendors best positioned to capitalise on the developing offshore BPO market are some of the top-tier onshore vendors.
With global networks and fulfilment capabilities and the ability to exercise a smart or flexible sourcing strategy to match customer needs, concerns over communications will be much reduced when going through these vendors even where they will provide the service from an offshore location.
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