perspective Offshoring in the banking and financial services sector, like most industries, is an accepted and widely adopted way of doing business. Throughout the 1990s financial services (FS) organizations quickly embraced offshoring. Organizations such as HSBC and Morgan Stanley set up captive shared service centers in locations such as Mumbai and Chennai for the provision of predominantly IT and transactional back-office functions including mortgage, credit card and loan processing. This early enthusiasm focused on standard, repetitive transactional processes. Today the FS offshore market still strongly reflects its heritage–and take-up of offshoring more complex processes such as finance and accounts (F&A) has been minimal. Given the current market turmoil, what lies ahead for this industry? Will FS institutions venture into offshoring processes that were previously retained? To answer these questions, we must first look at why the FS sector lags behind others in offshoring F&A. The first reason is that over the last few years FS organizations have had other priorities, primarily dealing with changes in accounting practices and regulations such as Basel II, MiFID and Sarbanes-Oxley. But that’s not all. While working on a recent U.K. bank engagement, three areas of risk were cited as barriers to offshoring: operational, compliance… Read full this story
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