The offshoring of financial services: a reassessment

Operating in an increasingly competitive market environment,
financial services companies are engaged in international reengineering of
business processes mirroring developments in manufacturing over the past four
decades. We examine the distinctive ‘anatomy’ of offshoring in financial
services, an industry which also manifests a high degree of geographical
concentration for ‘higher order’ functions. We argue that, while offshoring
offers considerable cost advantage in terms of labour arbitrage, the devolution
of key business activities to downstream and distant providers carries with it
considerable strategic risk and managerial complexity.