Financial firms continue to outsource IT services to slash costs

Source: TechNavio.

TechNavio, the independent tech-focused global research firm, has published a report on the Global Outsourcing Market in the banking and financial services (BFS) sector from 2013 to 2018, which it says is expected to grow at a CAGR of 7.07% over the forecast period.

Against a background of rising demand in the mortgage market, credit cards and commercial lending, the BFS sector worldwide is increasingly outsourcing both regulated and non-regulated activities to third parties, TechNavio says. Commonly outsourced IT service requirements include application development, programming and coding, specific operations related to finance and accounting, back-office activities and processing, as well as administration and contract functions.

“High-quality service at low cost is the main criteria for outsourcing services. The low cost of labour in many developing economies is driving the outsourcing market in the BFS sector,” says Faisal Ghaus, Vice President of TechNavio.

Key drivers for this market include the need for more cost-effective operations, shorter time to market, compliance in the face of swiftly changing regulations, as well as the need for process standardisation, TechNavio said.