Outsourcing is a core strategy within the financial services industry (Jensen & Pedersen, 2011) and the objective of this paper is to gain a deeper understanding of the trends of outsourcing and offshoring by a leading global firm within the sector. Through qualitative research in the form of semi-structure interviews with managers in the firm, significant learnings are revealed that will guide managers who need direction on how to effectively outsource or offshore.\ud
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The research resulted in three key findings. The first relates to the trends of functions outsourced by the firm. Initially non-core, repetitive, low risk tasks were outsourced but with increased cost pressure and developed relationship with vendors, core-higher risk functions were outsourced (Park & Wu, 2009). This led to the firm losing control over processes, as front to back tasks were fully operated by a vendor, thus highlighting the second key finding; the models of outsourcing or offshoring used within the industry. As there is a significant risk with loss of intellectual capital with a third part vendor model, alternative models such as utilisation of a captive center, which is a wholly-owned entity of the firm, or offshoring to low cost locations within the firms entity are preferred models that reduce risk while managing costs (Kotlarsky, et al., 2009). The third key finding refers to the lessons learnt from experts in the field; the managers interviewed. Their advice includes treating outsourcing as a long term strategy, with the functions to be outsourced phased to a vendor or offshore location in a planned manner (Krebsbach, 2004). Importantly also is the need to engage middle managers in all stages of the strategic planning and project management of outsourcing or offshoring.\ud
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There are many implications from this research including the impact regulatory policies have on outsourcing strategies, the effect of outsourcing on graduate jobs and the changes in skills needed in the Irish labour market. Education bodies need to identify and ensure the required skills are thought for positions in governance and remote management, as this is the area of growth in Ireland (Gaitonde, 2007). It is recommended that further research be conducted on other firms within the industry, as well as in various regions across the globe, as this area of research is significant in understanding the future trends within the financial services industry