Credit Crunch - Outsourcing for Finance & IT Sectors
Published by john mce in Career, 1 month 3 weeks 3 days 1 hour 45 minutes 43 seconds ago
The collapse of Northern Rock, HBOS and now Bradford and Bingley spells bad news for banking and IT sectors, but the credit crunch does present new opportunities for outsourcing, as experts predict outsourcing in the banking and IT sectors is to increase during these times of financial uncertainty.
41 per cent of financial services managers questioned in a survey conducted by the Management Consultancies Association (MCA) and the British Bankers' Association (BBA), expect to increase outsourcing because of the credit crunch.
The survey found that 90 per cent of the companies had already outsourced parts of their business, but only 54 per cent of the managers thought their organisation knew how to get good value from out sourcing.
89 per cent of those interviewed believe that there hasn't been a significant loss of jobs as a result of outsourcing, and 58 per cent believe that out sourcing has made their businesses more competitive. Connect, an IT support company, have revealed figures which show that IT outsourcing in particular, is increasing as a direct result of the credit crunch.
Mark MacGregor, Chief Executive of Connect said that they have experienced a 75% rise in IT support enquiries, mainly from sectors worst-hit by the credit crunch, such as Financial Services.
The trend is most prominent in middle sized companies employing between 50 and 500 people, where the costs of running their own internal IT department is seen as an unnecessary overhead.
However, it is predicted that hardware and software vendors will suffer as a result of the credit crunch, as companies hold back on hardware and software upgrades, such as dualcore PCs or updating operating systems to Windows Vista, in order to decrease immediate IT expense. Financial concerns are expected to drive businesses away from licensed-software deals offered by companies like Microsoft and from running their own in-house IT support teams.
A move towards online software is expected, and a move towards open-source software which can be tailored to a companies' needs without infringing on copyright regulations.
The credit crunch is predicted to produce a stream of new and renegotiated IT outsourcing deals as companies look to make extra savings on existing contracts. Outsourcers can expect tough demands from banks, but can also expect longer contracts because of such changes.
We can expect the credit crunch to erode IT jobs from high cost areas such as London and New York, to lower cost sites in the East such as Delhi, or smaller areas in the West such as Bristol or Bournemouth. The worst hit is likely to be contract workers, recent research indicates that the long-term jobless rate among IT contractors has risen from 4.4 percent, at the end of 2007, to 5.5 percent in March 2008. Fears over job security among contract workers are growing.
Despite a predicted fall in It spending, the Economist Intelligence Unit suggest that the drop in IT spending will be below the general spending decline. It is argued that the It industry is diverse enough to weather the storm.
As companies shut offices and try to reduce overheads, more businesses are expect to adopt remote-working models. The government is currently having a consultation about new flexible working legislation due at the end of the year.
Many employees could find themselves liberated from their desks, with the growth of broadband and various secure virtual private networks aiding this development.
41 per cent of financial services managers questioned in a survey conducted by the Management Consultancies Association (MCA) and the British Bankers' Association (BBA), expect to increase outsourcing because of the credit crunch.
The survey found that 90 per cent of the companies had already outsourced parts of their business, but only 54 per cent of the managers thought their organisation knew how to get good value from out sourcing.
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89 per cent of those interviewed believe that there hasn't been a significant loss of jobs as a result of outsourcing, and 58 per cent believe that out sourcing has made their businesses more competitive. Connect, an IT support company, have revealed figures which show that IT outsourcing in particular, is increasing as a direct result of the credit crunch.
Mark MacGregor, Chief Executive of Connect said that they have experienced a 75% rise in IT support enquiries, mainly from sectors worst-hit by the credit crunch, such as Financial Services.
The trend is most prominent in middle sized companies employing between 50 and 500 people, where the costs of running their own internal IT department is seen as an unnecessary overhead.
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However, it is predicted that hardware and software vendors will suffer as a result of the credit crunch, as companies hold back on hardware and software upgrades, such as dualcore PCs or updating operating systems to Windows Vista, in order to decrease immediate IT expense. Financial concerns are expected to drive businesses away from licensed-software deals offered by companies like Microsoft and from running their own in-house IT support teams.
A move towards online software is expected, and a move towards open-source software which can be tailored to a companies' needs without infringing on copyright regulations.
The credit crunch is predicted to produce a stream of new and renegotiated IT outsourcing deals as companies look to make extra savings on existing contracts. Outsourcers can expect tough demands from banks, but can also expect longer contracts because of such changes.
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We can expect the credit crunch to erode IT jobs from high cost areas such as London and New York, to lower cost sites in the East such as Delhi, or smaller areas in the West such as Bristol or Bournemouth. The worst hit is likely to be contract workers, recent research indicates that the long-term jobless rate among IT contractors has risen from 4.4 percent, at the end of 2007, to 5.5 percent in March 2008. Fears over job security among contract workers are growing.
Despite a predicted fall in It spending, the Economist Intelligence Unit suggest that the drop in IT spending will be below the general spending decline. It is argued that the It industry is diverse enough to weather the storm.
As companies shut offices and try to reduce overheads, more businesses are expect to adopt remote-working models. The government is currently having a consultation about new flexible working legislation due at the end of the year.
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Many employees could find themselves liberated from their desks, with the growth of broadband and various secure virtual private networks aiding this development.
About john mce
John McE writes articles for Stannah, the World's largest supplier of stairlifts (chair lifts) & the UK's largest independent manufacturer of passenger & vertical platform lifts.
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