SINGAPORE, April 29 (UPI) -- Over the next 5 years, the world's 100 largest financial-services companies expect to transfer an estimated $356 billion of their operations offshore in an effort to significantly reduce their costs, according to a survey released Tuesday.
The survey, conducted by Deloitte Research, also found that 2 million jobs would be moved offshore, with India receiving about half of those jobs. Ireland and South Africa are also attractive offshore centers, with China, Malaysia and Australia growing in popularity.
The financial institutions expect to reduce their cost by nearly $1.4 billion each by 2008, the survey said.
The shift of operations offshore is already underway. Thirty percent of the survey's 27 respondents currently have offshore operations and that percentage is expected to climb to 75 percent within two years.
"Offshoring is gaining momentum at a rapid pace," says Christopher Gentle, a director at Deloitte Research. "And getting offshoring experience as soon as possible translates into greater benefits -- from higher cost reductions to more business processes being handled by the low-cost centers."
But Deloitte Research emphasizes that taking a business offshore must be planned and executed carefully to be successful. The survey found that more than one-third of the moves offshore have been unsuccessful with the institutions planning no further relocations.
These unsuccessful moves have common characteristics, including cost reductions significantly below the average, a narrower scope with fewer functions moved offshore; a scale nearly one-fourth smaller than average, and a much shorter timeframe for planning and execution.
The survey shows that banks and insurance firms are transferring offshore such functions as application development, coding and programming, accounting and finance, operations, processing and administration, call-center operations and contact support centers.
Financial institutions that can utilize their existing offshore facilities expect significant future savings -- as much as 45 percent -- because they leverage offshore scale and scope.
But firms aspiring to move offshore should move quickly to capture the benefits of doing so, Deloitte noted.