35% of Insurance firm CIO’s opt for outsourcing in 2012: Novarica

February 9, 2012: A recent research of Chief Information Officers in the Insurance industry to estimate the penetration of IT outsourcing has found that the 85 per cent of them are currently availing services from outsourcing service providers to carry out some of IT functions. The survey was conducted by the research and advisory organization Novarica.   

The survey has observed that there will be increase in the number of CIOs who will decide to outsource during 2012. It has found that between 25 to 35% of the respondents is expected to raise the level of outsourcing. This was announced by Matt Josefowicz, partner and MD for the research and advisory organization. The chief information officers in the insurance industry are going for outsourcing and blended staffing strategies in an attempt to improve productivity without increasing the fixed overhead costs. With the need to accomplish a lot more with a little more, a proper mix of outsourcing can help insurance organizations to stretch their information technology resources.

One of the important findings of the survey is that 85% of the insurance companies are availing some kind of outsourcing services currently. The area where outsourcing is used includes variable staffing or data center management. In some instance legacy application maintenance is also outsourced.

Another finding is that big insurance companies outsource 25% of their Information Technology functions, while small and medium companies outsource 15 % of their Information Technology function.

The survey has found that more than 25 per cent of the big insurance companies are intending to increase their dependence on outsourcing. The functions that will be outsourced includes variable staffing and IT infrastructure. Legacy application management will also be considered for outsourcing.

Chances are low as 50 per cent for the medium and small insurance organizations to increase their outsourcing of variable staffing and legacy application maintenance. But in the case of outsourcing of infrastructure management, the probability is slightly higher for the medium and small insurance organizations to outsource.

When compared to the large insurance companies, the medium and small insurance companies are two times more likely to place more value in the outsourcing of Information Technology management and data center management. 

In the wake of the above observation, Novarica strongly suggests that the insurance companies should consider outsourcing option while developing technology and staffing plans. The survey covered 111 members in small, medium and large insurance companies which makes the 350 member council.

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