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UK and European banks that offshore their IT functions overseas are not behind jobs cuts in their domestic sector, a study of studies said yesterday. In a new report that clears Western financers, the biggest client of Indian BPOs, of adding to joblessness at home, the exporting of IT tasks claimed just 10% of their sector’s job losses. But the gravest threat to financial staff accounting for 75% of their losses was internal restructuring, like branch closures, recently sparked by the rise of eastern states as a financial hub. Internal changes ‘dominated’ banking lay-offs between 2002 and 2006, while over the same four years, “no correlation” was found between offshoring IT and sector employment. Staff will hope the lack of relation between the two will remain: 50% of all retail banks cited in the report said they planned to offshore some IT function, compared with 38% today. As a result, banks will have to increase the proportion of their IT staff offshore to almost half (up to 44%), compared with the current 32% of IT operations, and 38% of IT support. Given the report is from Deutsche Bank, observers may be sceptical about its author’s take that the forecast growth evidences “banks’ satisfaction and growing reliance on offshore vendors.” A survey in June by the Management Consultancies Association, which represents 70% of UK consulting firms, found that fewer than 25% understood how to get value for money offshore. Confidence inside financial outfits to carry out outsourcing properly was described as low. Yet Thomas Mayer’s report for Deutsche factors in analysis from 2001 to 2008 produced by the bank, its industry groups, independent pollsters, and IT outfits, including CapGemini and Nasscom. Moreover, the report confirms analyst suspicions in April that retail banks, hungry for savings, will sharpen their focus on business processing outsourcing (BPO) deals, to get more for the same - or ideally less, resources. At the time, PAC said horizontal processing services, like payroll, will increasingly be offshored, and strategic business processes, like mortgage and loans processing, will be considered afresh. In line with comments made by the National Outsourcing Association, PAC said it expected two-way job traffic from BPO players, as they try to establish a staff presence onshore to meet local demand. According to Deutsche’s research, routine IT support functions and back office roles were now “ready for offshoring”, and will join software development and IT-enabled process work, like accounting and call centres. Aug 19, 2008 Email this article Printer friendly page Previous Page
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