Overseas outsourcing on the rise

OFFSHORING is becoming an increasing trend among global banks and financial services companies, according to a new survey.

Currently more than 80 per cent of financial companies conduct some form of offshoring of their business activities, a survey by accounting from PricewaterhouseCoopers (PwC) has found.

In three years' time, 94 per cent of financial companies expect to offshore.

They can do this by one of three ways: setting up their own business in a foreign country, establishing a joint venture or entirely outsourcing their business to another company in a foreign country.

India was the most popular country for outsourcing, especially for IT-related functions, with China coming in second.

But other potential countries for offshoring include Ireland, Romania and the Philippines.

PwC partner Rahoul Chowdry said Australian banks were also looking to offshore some of their IT functions, despite public concern that it would mean moving Australian jobs overseas.

Mr Chowdry said the Australian banks were much slower than their global peers in offshoring but were now finding they had run out of options for reducing costs.

"Every organisation has a responsibility to maximise customer value and shareholder value," he said.

"If outsourcing is one of the ways of enhancing that, then they have a duty to at least explore the opportunity."

However the survey found that offshoring did not always produce the cost savings expected, with more than 15 per cent of respondents dissatisfied with the level of cost savings achieved.

The survey questioned executives from 156 financial institutions around the world, but did not specify whether any were from Australia.