India's State Banks Want Ban on Outsourcing


It strikes us as more than a little ironic. Just as U.S. banks appear to be getting over some of their misgivings about offshoring, including concerns over security and possible negative PR, India's state-owned banks are wrestling with a number of employment issues -- one of which is an apparent stalemate with the national government over outsourcing.


Deloitte is predicting that U.S. banks will boost their spending on offshoring of technology services from the current 6 percent of IT budgets to 30 percent by 2010. Indian outsourcing giant Wipro says that sales to banks made up 21 percent of its revenue in 2006.


McKinsey and India's National Association of Software and Service Companies are also predicting major growth in India's BPO business with U.S. banks. In fact, the two organizations believe that banking and insurance will ultimately account for fully half of India's total BPO market.


In India's own banking market, a union representing state-owned banks has asked the country's prime minister to disallow outsourcing. Workers are threatening to walk out in a three-day strike later this month if this demand and others are not met.


We are the first to admit that we do not understand the inner workings of India's banking market. Still, it seems odd to us that India's own banks are resisting a trend that drives such a big part of the country's economy.