The offshoring of financial services : a reassessment

Abstract

Operating in an increasingly competitive market environment, financial services companies are engaged in international reengineering of business processes mirroring developments in manufacturing over the past four decades. We examine the distinctive ‘anatomy’ of offshoring in financial services, an industry which also manifests a high degree of geographical concentration for ‘higher order’ functions. We argue that, while offshoring offers considerable cost advantage in terms of labour arbitrage, the devolution of key business activities to downstream and distant providers carries with it considerable strategic risk and managerial complexity.