Seven Reasons Outsourced U.S. Bank IT Jobs Are Heading Back Onshore

Some bank IT jobs that have been outsourced for the past 10 years or so are coming back stateside, at least according to one expert. “A number of banks have told me they’re pulling back work from offshore, particularly from India but not only India,” says Harley Lippman, founder and chief executive of Genesis10, an IT consulting and staffing firm based in New York. “India is still the epicenter of IT work for major banks, although some work has gone to China, Eastern Brazil and other locations.”

Lippman doesn’t have numbers to back this observation. “I’m gathering that as we speak,” he says. “A lot of people are interested in that.”

Lippman’s own company has benefited from this trend, although he declined to name any bank clients. His firm is hiring in Troy, Michigan; Atlanta (where it just opened a new facility); Grand Rapids, Mich.; and Kansas City, Mo. “That’s all driven by bank client demand,” Lippman says.

Some banks are bringing the work back in house, but the majority are finding an onshore outsourcing provider, Lippman says. “In all banks there’s head-count pressure; there continues to be cost pressure, there’s pressure on execution and delivery for all the major banks,” he says. Outsourcing offers variable costs and the flexibility to ramp up and down as the volume of work fluctuates.

Offshoring made sense 10 years ago, when a New York City programmer might have cost $100 an hour, versus $15 an hour for a worker with similar skills in India, Lippman says. “Today it’s very different, the world is more flat,” he says. “Jeffrey Immelt,” the General Electric chief executive, “said there’s no more cheap labor; I found that quite significant.” Inflation is over 20% in India.

Why are banks turning from offshoring to onshoring? Lippman offers several reasons:

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