Up to 450,000 European financial services jobs are expected to move to cheaper overseas centres by 2010 as banks in the region drastically increase their use of offshore resources, according to new research from Celent.
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, says the report.
Lauren Bender, manager of the retail securities & investments group at Celent, says banks that are not currently offshoring will find themselves unable to compete with lower-priced firms that are shifting work to cheaper locations.
"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," says Bender.
A number of European banks are already shifting large operations to cheaper countries such as India and China, despite the public backlash against offshoring. UK banks such as Abbey and Lloyds TSB already have extensive offshore facilities in India and other European financial firms are also establishing or extending offshore centres.
Recently Credit Suisse was reported to be planning to move around 5000 IT, back office and administrative jobs to cheap offshore centres in eastern Europe, Singapore and India, while Deutsche Bank reportedly plans to move almost half the back office jobs in its sales and trading operations to centres in India by the end of 2007.