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PwC questions outsourcing benefits

More than half of outsourcing projects in the finance industry show no initial cost benefits in the first year, according to research by PricewaterhouseCoopers (PwC).

However, the consultancy firm reported that the number of financial services companies sending jobs offshore will double in the next three years, despite staff in popular countries such as India proving harder to retain.

Businesses also maintain that they are planning to outsource higher value-added, knowledge-based activities such as financial research and modelling.

Despite being driven by cost savings, 15 per cent of those surveyed indicated that they saw no cost reductions even after five years.

A quarter of firms surveyed have up to 20 per cent of their staff in offshore centres, and half expect to have 10-20 per cent overseas within three years.

Almost half have transaction-based IT activities offshore, while only 12 per cent have no activities offshore.

PwC recommends firms to develop ongoing career development plans to ensure that they do not lose offshore staff to competitors as competition for staffing increases.

The findings follow in the wake of a report from Gartner which warned that staffing problems are causing security risks in offshore locations.

The analyst firm suggested that the shortfall in call centre agents will cause offshore outsourcing firms to hire fewer qualified staff, which could lead to reduced due diligence.

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