IT Services and Strategic Impacts for Global Banks: The Force Multiplier

According to Aite Group and its data and analytics partner, Alphacution, the fact that labor arbitrage remains the primary driver for the adoption of IT outsourcing needs to change.

Boston, June 12, 2017 — The global IT services sector continues to be dominated by lowest-cost, predominantly India-based human capital, and the motivation to engage with these services continues to be labor arbitrage. The expectation to improve performance through higher-quality output, more efficient output, or some other innovation is often ill-defined. Aite Group’s latest report, IT Services and Strategic Impacts for Global Banks: The Force Multiplier, works to add clarity to this by exploring the benefits that these services can provide to financial institutions. 

“Over and above the potential for savings, IT services firms actually help their clients create performance-enhancement opportunities for themselves,” says Aite Group’s managing partner Sang Lee. “This is accomplished by allowing clients to offload activities that bog them down and that, in fact, get in the way of optimal focus on their true value proposition. With continued long-term success on this front, we can truly envision the emergence of a global IT services community living up to the promise of a force multiplier,” he says.

This report, co-authored by Alphacution's Paul Rowady and Aite Group's Sang Lee, estimates the portion of banks’ IT spending that is attributable to the IT services sector and characterizes the wisdom of shorter-term cost savings objectives in the face of potential longer-term and arguably intangible liabilities for banking, financial services, and insurance. Aite Group’s data and analytics partner, Alphacution Research Conservatory, is a data and analytics firm focused on providing technical infrastructure intelligence and has developed a standardized data-driven framework that can measure technical leverage—the return on technology. This report is based on data from Alphacution’s model library, which currently includes financial and operational data related to more than 110 banks, brokers, asset managers, technology vendors, exchanges, and others. 

About Aite Group:
Aite Group is a global research and advisory firm delivering comprehensive, actionable advice on business, technology, and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, insurance, wealth management, and the capital markets, we guide financial institutions, technology providers, and consulting firms worldwide. We partner with our clients, revealing their blind spots and delivering insights to make their businesses smarter and stronger. Visit us on the web and connect with us on Twitter and LinkedIn.

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