Introduction
 
This report analyses the role of global sourcing strategies in European and North American financial services, highlighting the key trends and opportunities as well as the barriers that continue to prompt a skeptical approach to offshore sourcing by many FSIs.
 

 
Scope
 
The report draws on over 400 interviews with key IT decision makers in banks and insurers
 
The report benifits from in depth interviews with all the key global sourcing vendors
 
The report covers global sourcing trends in North American and European financial services
 
Highlights
 
Application outsourcing has developed from a workload capacity management solution, for bespoke application development requirements, to an increasingly strategic solution. As a result, FSIs are increasingly outsourcing large portions of, or all of the application services function to concentrate on specific areas of core expertise.
 

 
Vertical offshore BPO (offshoring of industry specific processes and operations) is gradually gaining momentum and looks set to grow rapidly over the next years
 

 
Datamonitor believes that FSIs with captive offshore operations will increasingly encounter the same staffing and retention problems that many vendors have experienced.
 

 
Reasons to Purchase
 
Improve FSI targeting through Datamonitor's propietry datasets on global sourcing strategies
 
Compare your companies performance to market leaders on key global sourcing parameters
 
Enhance your competitive positioning through improved understanding of FSI drivers and the competitive environment

TABLE OF CONTENTS
 
CHAPTER 1 EXECUTIVE SUMMARY 3
 
CHAPTER 2 MARKET CONTEXT 8
 
Introduction 8
 
Key findings 8
 
Scope 10
 
Background: offshore sourcing has gathered pace over recent years, but the real sourcing story starts here… 10
 
Application outsourcing services get strategic scope 11
 
Changing deal structures in application services is improving FSI acceptance 11
 
Moving to critical systems 12
 
Vertical offshore BPO - gradually gaining momentum 13
 
Process diagnostics offered as precursor to BPO pilot 14
 
A growing number of vendors have established increasingly global/international fulfillment models 14
 
Vendors have increasing sector expertise 15
 
Core vertical FS processes are increasingly starting to be offshored 15
 
Offshore markets and operating models are maturing 17
 
FSI attitudes: the vindication of global sourcing is in the experience 18
 
FSIs need to develop pragmatic global sourcing strategies / comprehensive choice in near- and offshore sourcing destinations is the linchpin to widespread global sourcing take-up 20
 
CHAPTER 3 COMPETITIVE DYNAMICS 22
 
Introduction 22
 
Key findings 22
 
Vendors fit into three main categories 23
 
Credible vendor coverage is increasing 23
 
CHAPTER 4 THE FUTURE DECODED 23
 
Introduction 23
 
Key findings 23
 
Offshore outsourcing is a small share of overall global sourcing spending 23
 
Growth drivers for offshore outsourcing are region- and even country-dependent 23
 
Growth will be fastest in BPO and greatest in application services 23
 
CHAPTER 5 APPENDIX 23
 
Abbreviations 23
 
Forecasts and assumptions 23
 
Future readings 23
 
SPP writing team 23
 

 
LIST OF TABLES
 
Table 1: Origination based region growth will be largely similar although captive operations conversion will drive higher North American spending growth 23
 
Table 2: Market growth of ˜ $1bn: in the short term growth is more driven by service type than line of business 23
 

 
LIST OF FIGURES
 
Figure 1: Idealized FSI decision making process 16
 
Figure 2: Offshore BPO maturity model 17
 
Figure 3: Actual offshoring remains confined to a relatively small part of the financial services industry – but clear evidence of polarization as offshore leaders continue to offshore 19
 
Figure 4: Vendor categorization 23
 
Figure 5: Vendor coverage of the market is improving, but FSIs have limited choice in higher value segments 23
 
Figure 6: Sourcing market coverage 23
 
Figure 8: Origination based region growth will be largely similar although captive operations conversion will drive higher North American spending growth 23
 
Figure 9: Market growth of ˜ $1bn: in the short term growth is more driven by service type than line of business 23