Credit crunch driving outsourcing demand

The financial services sector is turning to outsoucing because of financial constraints and liquidity problems, according to a recent survey

The credit crunch is predicted to drive greater demand for outsourcing in the financial services sector.

Almost half (41 percent) of 70 financial services managers questioned in a survey by the Management Consultancies Association (MCA) and the British Bankers' Association (BBA), expect to increase their current levels of outsourcing because of the credit crunch.

The survey found 90 percent of the companies have already outsourced part of their business and one-third had offshored work.

But there are still doubts about returns from outsourcing, with only 54 percent saying they felt their organisation understood how to get good value from outsourcing and only 24 percent saying they adequately understood the offshoring industry.

Almost all (90 percent) of those questioned felt outsourcing is now an acceptable way to do business.

Fiona Czerniawska, author of the report and director of the MCA's Think Tank research unit, said in a statement: "While innovation and creativity is exciting, the credit crunch has also created something of a wake-up call to the financial services sector. Many institutions which have so far ignored the benefits of outsourcing are being forced to revisit it because of financial constraints and liquidity problems."

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