Over the next five years, 500,000 jobs at American financial services firms will move overseas, according to a study by A.T. Kearney. Eight percent of the workforce will lose their jobs to offshore locations at mutual funds, banks, brokerages, and insurers. Companies anticipate saving $30 billion annually as job relocations begin to involve increasingly sophisticated positions within companies.
"Any function that does not require face-to-face contact is now perceived as a candidate for offshore relocation. The debate at major financial services companies today is no longer whether to relocate some business functions, but rather which ones and where," said Andrea Bierce, managing director at A.T. Kearney.
While early migration of jobs largely entailed back office functions such as data entry, transaction processing, and account reconciliation, companies are now looking at higher skilled areas such as financial analysis, research, regulatory reporting, accounting, human resources, and graphic design.
Nevertheless, the increasing dependency on overseas labor has not been a resounding success for all companies; fully 50% of the 100 companies surveyed reported that results were only "somewhat effective" or that it was "too early to tell."
The most popular country is India, although many are looking towards China with the hopes that the country will improve its protection of intellectual property rights. Companies are also exporting jobs to Canada, Brazil, Mexico, Philippines, Hungary, Ireland, Czech Republic, Australia, and Russia.