The survey of executives at 156 financial firms worldwide found that 82% currently offshore work to cheaper overseas centres, but this is expected to rise to 94% by 2008.

A quarter of respondents say they currently offshore between 10% and 20% of their headcount, but this is expected to virtually double in three years' time.

According to the survey, more than 50% of those surveyed currently offshore IT functions or plan to do so in the next three years. Only 12% do not currently offshore any activities at all.

By 2008 a further third of respondents plan to offshore HR functions such as payroll and a further 25% expect to offshore customer contact activities such as scripted sales calls.

Almost a quarter (22%) of firms surveyed said they were also looking to expand the range of services offshored by 2008 to include knowledge-based activities such as financial research and modelling, but 58% said would keep these functions at home.

Cost saving was the main reason for shifting work overseas for the majority (79%) of respondents. In the longer term 74% of financial services firms saved costs by offshoring activities, but the research found that the benefits of offshoring were less immediate in the first year of the project, with nearly a third of respondents actually experiencing no change in costs. Around 15% of respondents reported no change in cost base even after five years of offshoring.

The survey also showed that only half of those surveyed were satisfied with the overall impact of offshoring activities. The top three risks highlighted were finding and attracting quality staff to work in offshore centres, deteriorating quality of service and cultural differences between home and host markets.

Other concerns were rising wages caused by the demand for educated staff and rising turnover in the most popular offshore destinations. According to a recent report also compiled by PwC, turnover of staff in main centres in India can be between 40% and 60%.