Sectors driving Outsourcing Industry

The outsourcing industry has given impetus to inflow of foreign currency and creating job opportunities in India. The financial services sector has emerged as a key domain for outsourcing.

Work Flow and Growth Prospects

Banking, financial services and insurance (BFSI) comprise 38 per cent of the outsourcing industry in India (worth $47.8 billion in 2007). Most of the work outsourced comes from the US followed by Europe. According to a report by Mckinsey and Nasscom, India has the potential to process 30 per cent of the banking transactions in the US by the year 2010. Outsourcing by the BFSI to India is expected to grow at an annualized rate of 30 - 35 per cent. Outsourced services from the BFSI domain include customer support, software and solutions required for core banking, various banking processes like mortgage loan processing, application processing, verifications etc, and other services like market analysis, financial statement analysis etc. The

Indian Edge
While the major driver of the outsourcing wave is the cost advantage India enjoys in terms of employee cost, comparatively lower rentals for space etc., western outsourcers opt for India for various other reasons like better management, focus on core areas where they specialize, quality, service etc. According to Ramesh Mengawade, CEO and Chairman of Opus Software Solutions, a third party processor for credit, debit and prepaid cards, "outsourcing in card processing enables our clients flexibility and time to market advantages for introducing new features and enhanced security due to stringent regulatory compliance."

Future Outlook
Recently the Financial Services sector in the US has been under a lot of pressure on account of the sub-prime crisis, due its exposure to securities backed by real estate assets. This has resulted in uncertainties regarding the flow of work from this sector to India. There is a view that the slowdown in the US will affect the IT and BPO industry adversely while there is another school of thought that the slowdown would eventually benefit India as companies will outsource more work to check their costs. It seems that the growth for companies with outsourcing jobs in the financial sector is here to stay in spite of the recession in the west and like in the past Indian companies will raise their standards to meet the requirement of their clients across the globe.*

*Rahul Mantri- Economic Times