Sound Familiar? Study Shows U.S. Financial Sector Heading Overseas

By Agence France-Presse U.S. banks, brokers, insurance and other financial groups plan to move 500,000 jobs overseas in the next five years, with India the most enticing target, a new study showed. Relocations were expected to save $30 billion a year in operating costs, said the study by management consulting firm A.T. Kearney, which spoke to about 100 financial services firms' executives. "Any function that does not require face-to-face contact is now perceived as a candidate for offshore relocation," A.T. Kearney managing director Andrea Bierce, who ran the study, said in a statement. Jobs being transferred overseas once focused on back office functions such as data entry or account checking, Bierce said. Now, jobs such as financial analysis and research are going abroad. "The debate at major financial services companies today is no longer whether to relocate some business functions but rather which ones and where," she said. Half of the survey's respondents, however, said offshore initiatives so far had been ineffective or that it was too early to measure the impact. A.T. Kearney issued its own ranking of countries already hosting multinationals and offering mature technology, a skilled labor force, expectations of future development and scope for expansion. They were ranked according to cost, environment and people. India was selected as the best choice for offshore business processing, followed by Canada, Brazil, Mexico, Philippines, Hungary, Ireland, Czech Republic, Australia, Russia and China. China was expected to become increasingly popular as U.S. businesses gained confidence that their intellectual property rights would be protected, A.T. Kearney said. "We already know that one major insurance company is developing an innovative product to protect intellectual property," Bierce said. "As these types of products proliferate, we believe China will make great strides in attracting U.S. financial services companies." Copyright Agence France-Presse, 2003