7 Reasons Banks Are Taking IT Work Back Onshore
July 31, 2012 11:19 AM
Regulators
"Banks are increasingly concerned about protection of confidential information, particularly financial information offshore, it's not as protected [in an outsourcing relationship] as it is onshore," Lippman says. (Image: Shutterstock )
Inflation
In India, wages increased 13% in the past year, Lippman says. China has also had double-digit inflation. "If that continues, over the next few years, the cost savings will evaporate." (Image: Shutterstock )
Management Issues
"From a purely IT perspective, there's the difficulty of managing work eight time zones away," says Lippman. (Image: Shutterstock )
Reputational Risk
"If banks are firing employees to send jobs to cheap labor offshore, that could really hurt, not help, their relationship with the community and with lawmakers in Washington," Lippman says. (Image: Shutterstock )
Lower U.S. Wages
In the states of Michigan, Kansas, Florida and Georgia particularly, wages have been depressed, making those attractive places to send IT work. (Image: Shutterstock )
High Cost of Travel
Banks that outsource offshore tend to send IT departments overseas regularly [to countries like China and India]. Such trips cost $15-$20K per person. (Image: Shutterstock )
Turnover
Offshore turnover rates are much higher than onshore, Lippman says. "People will jump ship for very small amounts like $1 an hour," Lippman says. It can take six months to hire a new person and get them up to speed. (Image: Shutterstock )
