Technological change and cost reductions represent the primary drivers for financial services firms to pursue outsourcing solutions, according to research conducted by Boston-based firm, Cerulli Associates.
The Cerulli research looked at the drivers for outsourcing in the US environment and said that as technology improved the in the marketplace, many firms recognised that it was more cost-effective to purchase a product or service from a provider than to seek to develop a product in-house.
The research also suggested that firms were increasingly looking to outsource non-core functions in circumstances where they needed to concentrate on core activities such as growing assets under management and strengthening relationships with clients.
It said that while one-third of firms had indicated that the need to reduce costs was the primary reason influencing the decision to outsource, this represented a change from previous surveys and indicated that firms were now recognising other benefits which flowed from outsourcing.
Summing up its findings, Cerulli said that firms should at least consider working with an outsource provider when examining how to increase operational efficiency, allocate resources, or add new capabilities.
“Increased competition, new and proposed regulation and the velocity of technological change have made it m ore difficult for intermediaries to focus on their core business,” it said.
