Tuesday, May 11, 2004

Banking on outsourcing

Because of pressures to cut on costs to serve their customers better, banks rely heavily on outsourcing and are projected to outsource even more.

Some of the biggest banks in the world are already big clients of Indian service providers like Infosys and Wipro to handle tasks like help-desk, customer service and claims processing.

A recent study estimates that the top 15 global financial services companies will increase their outsourcing of information technology projects from a value of $1.6 billion this year to $3.89 billion in 2008.

That's an increase of 34 percent annually.

Some banks have either outsourced or set up operations in India itself to handle their requirements at lower costs. In the case of industry giant Citibank, it decided to acquire its Indian partner altogether.

According to a CNET report, Citigroup is paying about $126 million to take full control of Indian IT services company e-Serve International, which provides call center, transaction processing and data management services for Citibank worldwide. Citibank previously owned about 40% of shares in the company.

Which indicates that Citibank wants full control of the outsourcing chain and to keep its operations in India as intact and confidential as possible.

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