| The trend for outsourcing lower level IT | | | | will bring their own skills sets and help |
| functions, requiring generic and easily | | | | improve the quality of the project. |
| acquired (and replaced) skills, has been | | | | |
| sustained and popular with financial | | | | According to a 2006 National Outsourcing |
| companies. Offshore destinations such as | | | | Association research report, 73.3% of |
| India offer scalability because their working | | | | respondents outsourced application |
| population is significantly larger than the | | | | development. The second most popular function |
| domestic market. They also provide a pool of | | | | was application re-engineering and migration |
| skilled graduates, as well as impressive | | | | at 36.7%. The study attracted seventy-six |
| language capabilities, and a compatible | | | | responses from outsourcing decision makers |
| culture. | | | | within financial organisations throughout the |
| | | | UK. |
| Initially big business took the plunge and | | | | |
| directed IT functions offshore, but today | | | | This trend for outsourcing increasingly |
| even smaller companies with a turnover of | | | | complex projects perhaps isn't so surprising. |
| less than £5 million and/or less than 100 | | | | Most finance companies that outsource IT |
| employees are happy to outsource. This | | | | functions prioritise fluid communication, |
| reflects the growing trend for a wide range | | | | domain and technology expertise and security, |
| of companies to outsource all manner of | | | | with cost perhaps fourth on the list - |
| business to offshore destinations. Even the | | | | important, but of no real use without the |
| smallest start-up will look east if they have | | | | other three. Without expertise or good |
| a suitable project in hand and an eye turned | | | | communication skills, a supplier could take |
| to the best deal. | | | | up valuable management time. At worst, |
| | | | miscommunication can be disastrous. |
| India is the most mature offshore | | | | |
| destination, closely followed by Sri Lanka. | | | | Businesses should carefully consider the full |
| The Far East and South East Asia are | | | | advantages (as well as potential |
| alternative destinations, although not as | | | | disadvantages) of offshore financial |
| popular. Another emerging trend is for IT | | | | outsourcing, before committing to a supplier. |
| functions to be outsourced to nearshore | | | | India has experienced wage inflation because |
| destinations like Russia, the Czech Republic | | | | of competition in the market - the ITO skills |
| and Poland, where security might be tighter | | | | pool is finite. So if labour costs rise, it |
| and management-time can be more effectively | | | | makes sense to outsource higher end projects, |
| utilised. | | | | if that is both possible and desirable. |
| | | | |
| However, the market trend for finance | | | | Whether a project can be outsourced still |
| companies to outsource relatively simple IT | | | | depends on its complexity and size, as well |
| functions to Sub Continental Asia is being | | | | on management time, security and adherence to |
| superseded by a growing desire for suppliers | | | | regulation, but there seems to be an |
| to build systems and applications that | | | | increased belief that offshore suppliers can |
| supersede anything that they could build | | | | enhance the value of a project, rather than |
| in-house. From wanting 'yes men' companies | | | | simply completing a given project in an |
| are now keen to engage with suppliers who | | | | unimaginative fashion. |