- In HFS’ recent Pulse Study, we surveyed 800+ IT and business leaders across industries, including 54 banking and financial services (BFS) firms, about their emerging post-pandemic realities and plans.
- HFS asked respondents to what extent they would change their shared services and outsourcing delivery models for offshore, nearshore, onshore, or location-agnostic. We measured the net trend between the planned increase and planned decrease and learned that all sectors fervently embrace location-agnostic delivery models. No duh. We are all living this liminal reality, and, as HFS has previously written, the work-from-anywhere economy is here to stay.
- The more interesting study finding is the rise of onshoring. We define onshoring as hiring talent in the same region and same time zone, which almost seems to negate the location-agnostic point (ie: why hire more in one area if location does not matter). Our read of this data is that it depends on the work being delivered.
- The upward trend of location-agnostic and onshore delivery is similar for our entire sample, albeit slightly more muted for BFS respondents. Where things get interesting is for nearshore and offshore delivery. The net trend for nearshore and offshore delivery for every sector except banking is bet-hedging positive. The BFS trend toward nearshore delivery is almost flat (+2%), and the offshore delivery trend is negative (-11%).
- Why? When we map this data to supply-side data from the top service providers to BFS firms, they indicate that their fastest growing offerings are in payments transformation, financial crimes mitigation and compliance, core banking transformation, and customer experience transformation. That’s a heavy transformation focus tied to massive digital upgrades in how banks operate. Betting the farm on massive digital investments from a distance, particularly during a global pandemic, has increased the appetite for and importance of localization for the BFS sector. As the CEO of a regional US bank recently shared with HFS, “All banking is local and bears the dual responsibility of growth and return on capital with making a positive impact on the communities in which we operate.”
- While the work can perhaps be done from anywhere, there is a growing movement in BFS sectors to right-size the balance between offshore and nearshore delivery with an increased onshore, local presence. Or, as one service provider CEO put it, “be where the customers are.”
- While this trend preceded the pandemic, perhaps most notably with service providers like Infosys investing in localized resources and centers of excellence, others, like Wipro, TCS, and Mphasis, have followed suit, investing in local centers and leadership and hiring local talent. They deliver digital impact while supporting local economies.
The Bottom Line: BFS firms are leading the charge for onshore delivery as localization becomes the new normal for strategic initiatives, collaboration, and relationship building
No one wants to jet around the planet for work any longer or play time zone bingo for initiatives that really matter. And with ESG initiatives becoming increasingly important, ensuring contribution to the communities in which BFS firms operate is critical for banks and their partners.
Note: Other industries include consumer packaged goods, energy, healthcare, industrial manufacturing, insurance, life sciences, retail, technology, telecommunications, transportation and logistics, travel including airlines and hospitality, and utilities.