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Akeman Capital have released a report revealing that, with the recent increase of companies downsizing and cost saving, the trend of outsourcing to Asia has been an option that many companies have chosen to take.
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Akeman Capital have released a report revealing that, with the recent increase of companies downsizing and cost saving, the trend of outsourcing to Asia has been an option that many companies have chosen to take.
According to the study conducted by Akeman Capital, their sources say that difficulties with managing staff abroad, along with consumer group pressure have caused the main concerns and thus show how much of a service can be provided through another country. It is anticipated that $356 billion worth of global financial services cost base will go to Asia, particularly India over the next several years. This is approximately 15% of the $2.34 trillion cost base of global financial services for the top 100 financial institutions globally.
With this 15% estimation, Akeman Capital believe 2008 should see the migration of over two million jobs out of the 13 million employed in the financial services sector.
This is expected to produce a major cost saving for the top 100 financial service firms, a cost saving of approximately $1 billion each.
Akeman Capital’s chief analyst reportedly said that the perceived benefits of this are uncertain but that many corporations are still opting to implement it. He went on to add that decisions need to be made regarding the future of financial service outsourcing to Asia and the political and economic repercussions this may pose for both the domestic and offshore communities.
Akeman Capital are of the opinion that payroll is the most commonly outsourced function, chosen by many respondents. Budgeting and forecasting is at the other end of the scale, with 85% surveyed saying they had no intention to outsource and only 1% already having done so.
Company’s shareholders demand growth, in contrast to the industry`s ability to generate return on capital employed therefore outsourcing may be the best and most effective solution.
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