At a Glance
The argument for financial services organisations to
outsource is strong, despite past reluctance and negative thinking.   In the past, despite compelling financial arguments in
favour of outsourcing, outsourcing was often regarded as a sign of weakness—an
indication that the organisation lacked capabilities. Bearing this stigma, IT
outsourcing itself has been oscillating in and out of favour for a while.
In the financial services sector, fears around security and
loss of control were the crux of this negative thinking. Also, financial
services organizations felt that by outsourcing IT, they were sacrificing a key
competitive advantage. Transferring resources or key information regarded as
the backbone of the bank’s business was unthinkable.
Further, many early IT outsourcing examples were focused
entirely on cost reduction and displayed limited success and some negative
experiences. These types of early examples and the associated problems
continued to bolster the arguments against outsourcing.
Recently however, financial services organisations have been
re-evaluating their operating models, underlying costs and core competencies.
Support areas such as IT, HR, finance and back office administration—the
non-core competencies that have absorbed resources and attention—have also
fallen under the spotlight.
IT departments in particular face continuing challenges: - Managing costs in a tumultuous
economy.
- Increasing efficiency and
effectiveness.
- Aligning processes with business
priorities.
- Choosing emerging
technologies.
- Enabling enterprise
integration.
- Delivering demonstrable business value
quickly.
As a result, many financial services organisations are
reassessing their stance on IT outsourcing. Mark Ryan, Accenture-partner,
Financial Services, outlines the case for financial institutions to outsource.
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