Strategy drivers in offshoring

All banking processes and long term strategies are closely linked to specific themes and objectives often expressed in the form of drivers. Like all other strategies, an off-shoring strategy too is linked to key drivers.

The most significant driver leading to wide-spread acceptance of off-shoring is the transformation of the industry as a whole. The removal of barriers between banking sub-segments has led to the breakup of the monolithic model of banking. This in turn has led to the creation of an extended enterprise that can outsource and offshore numerous functions to create leaner and more aggressive organization.

With the increasing acceptance and popularity of distributed processing, banks now realize that offshoring should be leveraged across the banking P&L, and not just be seen as a means to reduce non-interest expenses alone. After cost efficiency and quality management philosophies like Six Sigma, today's buzz words in banking are scale, speed, and specialization.

As off-shoring becomes part of mainstream banking, a parallel trend has emerged-the increasing level of specialization of activities, leading to increased scale of operations. For example, within credit management, receivables management and credit worthiness assessments are now highly specialized functions. There is a strong case for developing such specialized units of excellence in an offshore location.