Bear, Stearns & Co. last week joined the growing number of financial-services companies that are moving technology work offshore. The company named India-based Satyam Computer Services Ltd. as one of its preferred IT-services vendors.
Satyam will handle application development and maintenance for both mission-critical and legacy systems. The companies haven't disclosed specifics. Satyam president Ram Mynampati says the deal involves work on strategic initiatives and that Bear Stearns "believes we can be a strategic partner in exploring ways and means of contributing to the organization's business drivers."
Other companies in the financial sector that are sending work offshore include Bank of America, Lehman Brothers, and Nationwide Financial. Forrester Research analyst Stephanie Moore predicts that growing acceptance of overseas services providers will prompt others in the industry to follow. The financial sector will be one of the first to fully embrace sending business processes offshore, she says. "Already, banks are outsourcing such things as mortgage processing and credit-card collections to Indian business-process outsourcing firms. And top-tier investment banks and brokerages are beginning to outsource their equity research to India."
Yet IT vendors with ties to the financial industry who stand to lose from the offshore trend, such as Sun Microsystems, are working to make their products easier and less expensive for businesses to deploy in-house, says Roger Chen, associate professor at the University of San Francisco School of Business and Management. He's convinced those efforts will temper interest in offshore outsourcing. Says Chen, "As technology becomes more standardized and less complex, then we will see the reverse of this [offshore] trend."