Banking institutions globally are continuing to embrace the offshoring boom, and are now reaping the rewards, research has found.
According to Deloitte, the financial services industry globally has seen a sharp rise in cost savings through offshoring, with an 18-fold increase in offshore staff in the past four years, with an average saving of 40 per cent per business process outsourced.
While traditionally, IT processes were seen as the most obvious candidates for offshoring, HR is increasingly in the firing line. “Over the last three to four years, there has been significant growth in business processes offshoring, particularly around transaction processing, finance and HR,” Deloitte’s analysis read.
Deloitte added that organisations looking to offshore should decide whether to offshore HR, along with other support functions such as finance and accounting and knowledge-processing activities, should do so only after developing a multi-service model that incorporates IT, call centres and business processes.
Moreover, prior to offshoring, banks should ensure that all onshore inefficiencies are rectified. “In future, the best offshoring strategies cannot be based solely on financial gains from labour arbitrage,” said Jack Ribeiro, managing partner at Deloitte’s global financial services industry group. “Otherwise the legacy inefficiencies of older, onshore processes, may simply be transferred offshore.”
Australian banks are joining in on the offshoring bonanza. Of the major banks, only Commonwealth Bank (CBA) and Westpac do not offshore, according to the Finance Sector Union of Australia (FSU). However, BT Financial Group, a subsidiary of Westpac, has offshored some superannuation operations, the FSU said.
According to the FSU, ANZ offshores the most jobs, with around 1,400 roles currently offshore.
Commonwealth Bank, meanwhile, has not ruled out offshoring in the future. “The bank has, in the past, undertaken evaluation work on offshoring but has chosen not to proceed at this time,” CBA said in a statement. “The Commonwealth Bank is focused on providing improved customer service at a lower cost, but is mindful of its position as an iconic Australian company. Whilst offshoring is not currently on the bank’s agenda, research undertaken within the bank indicates that there may be a labour shortage looming in Australia in the next five to 10 years.”