Offshoring in the European Banking & Securities Industries

May 10, 2006

Abstract

Paris, France May 10, 2006

Offshoring in the European Banking and Securities Industries

European financial services firms will drastically increase their use of offshore resources, with up to 450,000 continental European financial services jobs moving offshore by 2010.

Europe is the fastest growing region for most Indian outsourcing firms, and will continue to burgeon as European firms bring their cost structures in line with global competitors, according to a new Celent report, Offshoring in the European Banking and Securities Industries. The report provides an overview and analysis of key trends driving the move to offshore and looks at those European financial services firms that are aggressively offshoring. Further, it looks at the key issues that impact firms' decisions about offshoring on a country-by-country basis.

"As European financial markets continue to liberalize, converge, and grow, banks that are not leveraging the cost savings and experience of offshoring will find themselves unable to compete with lower-priced firms that are. For the moment prices in markets such as France and Germany are elevated enough that banks can make an attractive margin even without offshoring; however, this situation is unlikely to hold over time," says Lauren Bender, manager of the Retail Securities & Investments group at Celent and author of the report. "Over the next couple of years we will see firms that have not yet started to offshore in an important way continue to experiment with offshoring. Eventually most will come to the point where offshoring has become a standard part of doing business."

As the use of outsourcing and offshoring continues to mature, Celent expects to see more and more firms developing a pool of strategic partners and internal resources across the globe that will work together to deliver a firm's products and services in a way that maximizes cost effectiveness and performance and minimizes overall risks. This trend toward "global sourcing" goes hand-in-hand with the move toward long-term strategic partnerships between financial services firms and offshore/outsource vendors.

The report examines the experiences of leading European firms such as ABN AMRO, Deutsche Bank, and HSBC, which have been offshoring aggressively in recent years. It also explores why France, Southern Europe, and the Nordic countries have been slower to offshore than their British, Dutch, and German counterparts. In addition, the report looks at the main offshore locations that are being leveraged by European firms, namely India, Russia, China, and Eastern Europe.

The primary European countries covered in the report are the United Kingdom, Germany, France, Benelux, Switzerland, Spain, Italy, Portugal, and Scandinavia. The primary offshore countries covered are India, China,Russia, and Eastern Europe. Companies covered include ABN AMRO, Barclays, CSFB, Deutsche Bank, HSBC, ING, Société Générale, and UBS.

The 39-page report contains nine charts and three tables. A table of contents is available online.

 

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Paris, France May 10, 2006

Offshoring in the European Banking and Securities Industries

Executive Summary 3
Background 4
  Offshoring vs. Nearshoring vs. Outsourcing 4
  Key Activities 5
  A Large Potential Market 6
Offshoring In Europe Today 7
  The "Typical" European Offshoring Path 8
  Offshoring & Nearshoring Destinations 9
  Offshoring Activity Varies By Country 17
  ... And By Customer Base 21
  Follow the Leader 22
  Companies to Watch 25
  Captive Facilities 27
The Way Forward 31
  Competitive Pressures Will Push Continental Europe to Expand Offshoring 31
  Increased Spending Will Drive Firms to Look Offshore 31
  Offshoring is Here to Stay 34
  The Types of Offshoring Services Continue to Expand 35
  Private Banking is a Growth Area 36
  Politics, Politics, Politics 36
Conclusion 37
Objectivity & Methodology 38

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