US banks outsourcing middle level jobs to economize operations

A recent development in the business process outsourcing (BPO) sector reveals that instead of outsourcing the typical comparatively inexpensive operations, a number of smaller banks in the United States are now sub-contracting the jobs of middle-level executives to India. This move has yielded double benefits to these banks –further economize their functioning and retrench lesser number of employees.

Quoting HFS Research Ltd., an IT and BPO consultancy firm located in the United States, chief executive Phil Fersht, a website reports that an increasing number of US banks, especially those located in Georgia, Texas and North Carolina, are delegating more jobs that are usually dealt by middle level executives to offshore BPO firms, particularly in India.

It may be noted that the IT and BPO industry in India generates as much as 60 per cent of its proceeds from the United States and conventionally, it has been obtained by undertaking low-end jobs on an extensive basis. Recently, increasing unemployment in the United States has to an extent compelled the American firms to hold back from outsourcing jobs offshore. In addition, President Obama has especially been critical of outsourcing jobs, especially to India, with a view to stimulate the recovery of the US economy.

In such a situation, relatively smaller banks in the United States are sub-contracting jobs like mapping credit threats to Indian companies or developing mortgage products, while they are holding on to the low-rung operations like processing loan requests. The low-end jobs are now being handled by the local employees in the United States. This have proved to be a very profitable venture for these banks, as the savings from outsourcing middle level jobs may be quite high (around 60 per cent), but they do not required laying off a large number of employees.

According a senior Gartner banking and finance research executive, Peter Redshaw, it is noteworthy that the smaller banks in the United States that have never outsourced jobs earlier, are now adopting this process with a view to cut costs. He said that these banks are especially outsourcing jobs, such as accounts maintenance, risk management and investigation that are away from the public eyes and also imperceptible to the regular clients. According to an estimate prepared by Gartner, the global business research and technology advisory firm, Indian firms proving back-office services have bagged as many as four such transactions from the provincial and minor US banks during the last one year.