Half of bank IT to be outsourced or offshored

Half of IT development and maintenance by financial services organisations will be outsourced or offshored within a few years, according to Accenture.

Banks and insurers are increasingly confident about outsourcing core chunks of their computing infrastructure, Adam Munton outsourcing partner at Accenture told silicon.com.

He said: "They want to use outsourcing and offshoring to address some of the legacy challenges that have built up, the burden of a complex IT landscape."

For example, he said, many insurers are weighed down by dozens of policy engines - legacy systems which are costly to keep running.

Munton added: "Many organisations have 10 to 30 of these systems and that creates a burden on them in terms of cost to service and maintain. Historically it's been difficult to attack these problems in the UK."

Sid Khanna, Accenture's global managing partner for outsourcing, predicted that as banks get more comfortable with outsourcing they will expand their use further.

He said: "In financial services, in the space of the next few years roughly half of development and maintenance will be outsourced or offshored and that's a huge change compared to where organisations are today."

Khanna said greater maturity will lead to great complexity in the use of outsourcing - for example customers combining outsourcing with captive offshoring to India and offshoring to suppliers in other parts of the world.

Munton added that it is important to train the IT department to deal with third-party suppliers: "The retained organisation needs to be better at different things. You have to be excellent at working in partnership with a supplier and really excel at understanding the business and being a business partner."