Faster outsourcing to India needed: Deloitte
posted in Outsourcing News and Top Outsourcing deals, Outsourcing to India |British companies will need to outsource work to India and other low cost economies at a faster rate to benefit from lower labour costs and exploit the benefits of globalisation, says a leading consultancy.
In a report, Deloitte, the consulting firm, said that outsourcing to India and elsewhere will have to be stepped up in the next four years.
It predicts a huge shake-up in the area of processing, as firms try to react to increasingly cutthroat competition from across the world.
The Deloitte analysis predicts that an increasing number of products will be marketed as commodities. With customers unwilling to pay more than a bare minimum for such services, margins will become thinner making it increasingly important for companies to cut costs where they can, it adds.
“In the back office, this is likely to further drive the move to offshore non-customer facing activities,” writes Deloitte in a report detailing the likely impact of globalisation on the sector up to 2010.
According to The Herald, the report adds that savings generated from offshoring work to places like India could be reinvested in developing services for high-value market segments, such as the “mass affluent”, in mature areas.
Banks and the like will need to ensure they are positioned to tackle emerging markets, like China and India, in which financial service markets are set to grow much more rapidly than in the West, it said.
“Success will hinge on creating an exportable, low-cost business model specifically designed to serve these new types of customers (low income, high volume),” said Deloitte.
As firms will need to create economies of scale where possible, a dramatic acceleration in merger and acquisition activity is likely, it predicts.
Deloitte specialists expect 700 European banks to disappear over the next three years, and believe that a number of deals resulting in firms in the eastern and western hemisphere combining are likely.
The Deloitte report was based on a survey of chief executives at 175 leading financial services organisations, in which 65 per cent highlighted globalisation as the biggest issue facing their organisation.
