About a decade back, when the BPM industry was witnessing an upswing in outsourcing operations, nobody would have anticipated that the process would come full circle. But the inevitable is happening now. Many Western companies are increasingly looking at insourcing as part of their business strategy to improve profits. This idea has been gaining ground especially in financial services; insourcing trends have influenced the whole process of operations in this sector.
This concept has find acceptance in the BPM industry in the face of reported failures in outsourced relationships. Issues that have emerged from outsourcing have given impetus to this process. One main issue is the poor quality control of services and products delivered. Companies that were initially able to cut down on costs through outsourcing have later encountered problems with delivery schedules in addition to the low quality of finished products.
In financial services, insourcing trends have been on the rise. This has been caused by several factors such as the failure to achieve expected results, the need to apply in-house expertise, pressures at the marketplace, financial segmentation, and flexibility in contracts. A survey by the financial advisory and consultancy firm Deloitte had found that there have been growing instances of enterprises bringing back the work that they had outsourced to vendors.
Financial services: Insourcing trends minimize outsourcing activities
Outsourcing contracts were reported to be terminated before completion, in 48% of the cases. In addition, 34% of those who terminated agreements opted for insourcing. While the global recession in 2008 forced companies to look at outsourcing, many firms in the United States have started moving towards insourcing as a more viable concept. For financial services, insourcing trends have been considered by the BPM industry as a way of minimizing outsourcing activities and bringing job opportunities back to the United States.
A good example is the LAC group, a company specializing in information management, that provides 24 x 7 research support for various operations of other firms. This enterprise has been providing insourcing services to US companies in various fields including financial services; insourcing trends have fuelled the rise in the popularity of such organizations. The services provided by this company are based on consulting, expense reduction, information management, and staffing and recruiting.
In the BPM industry, insourcing has emerged as a potential threat to outsourcing. Economic principles that underlie business can be considered the basis for this trend. The increase in labor costs in countries such as India and China has propelled this movement. It remains to be seen whether this trend can be sustained through successful ventures undertaken in this direction.