Slow Growth in Banking Sector Elicits an Outsourcing Alternative
One of the sectors in the economy that has been under a lot of pressure has to be the banking and finances sector. Against the backdrop of the 2008 crisis, several banks are still struggling to make their mark in the industry. As a result there has been a slow growth in the banking sector in as much as some institutions post amazing results. Banks are now forced to consider strategic cost management in a bid to secure a future in the turbulent markets, and as a result this has seen a lot of outsourcing activities that are expected to increase into the near future.
Lloyds Banking Group’s Darryl West carefully points out that any banks that are to succeed into the future will have to focus on cost savings especially over the next few years. This will allow them a lot of room for growth, and this is one of the main reasons why outsourcing is becoming the next best alternative.
India has been a major beneficiary of outsourcing over the years much as other countries are also entering the fray. In order to ensure a sense of growth in the banking sector banks have to consider looking into avenues like mobile banking and most recently cloud computing, all of which are effectively handled by Indian firms. Companies like Tata Consulting Services Ltd and Wipro Ltd are on high alert as most banks look into outsourcing.
Offshore firms have also been pointed out as the main beneficiaries of such contracts especially when you consider the fact that some of them have long term contracts with the banks and other related financial institutions.
In as much as outsourcing seems to be the best way out for the banks, it is worth noting that it implies a lot of or a significant loss of control that banks have over their operations. This therefore means that they would have to leave so much to chance. This does not sound so good for business, and because of this the banks now look into private cloud computing in order to maintain control of a significant level of their services. This is of course an insight from Peter Redshaw, the Managing VP at Gartner Inc.
News that the UK government is strongly considering options as far as re-privatizing banks before the 2015 elections has since been received by mixed reactions from all concerned parties. Several experts have indicated that returning banks like Lloyds and Royal Bank of Scotland Group Plc to private ownership is bound to see an increase in outsourcing contracts. This is especially so from banks those have experienced a redundant revenue growth in the recent past, or those that are yet to fully recover from the 2008 crisis.
Besides that this will see several banks get wind of some financial obligations that they have accumulated over the years, especially in as far as loans are concerned. When you compare the operation of banks today and their operation some time back in 2008, you will also realize that the focus has shifted from investing in service activity and products (top line growth) to cutting costs through outsourcing.
– Back Office Pro