Banking IT jobs safer during offshoring pause

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The trend for offshoring banking IT roles to far flung locations looks to have stalled recently, suggesting new redundancy announcements in the UK will become increasingly rare. However, this doesn't mean that it won't resume.

Research by the FT says that there's been a drop off in the offshoring of jobs from the UK, due to the initial cost of setting up such a venture and the fact that locations like India and China no longer offer sufficient cost advantages.

However, announcements of banking IT redundancies - most recently at RBS and Lloyds TSB - suggests cost-cutting, if not offshoring, is still very much on the agenda.

Nigel Roxburgh, research director at the National Outsourcing Association, admits there has been a slowdown in banks offshoring IT roles in the last three months, but that this is a "pregnant pause".

"With the merger and takeover activity amid UK banks, combined with governmental intervention, offshoring decisions have been put on hold until there's sufficient clarity. However, financial services firms are still very much of a mind to offshore in the long term," he says.

Rajeena Brar, senior consultant at technology think-tank Pierre Audoin Consultants, agrees that there are political issues surrounding offshoring at the moment, combined with banks focusing on short-term challenges, which has stalled it to some extent.

However, she adds: "The majority of banks have already announced redundancies in the UK, so when we see an increase in investment in IT services in the second half of this year, banks will either simply recruit new staff in offshore centres or outsource it to a third-party. This way, there's not a direct correlation between offshoring and UK job losses."

Technology work likely to be offshored includes application development, support and maintenance, says Brar.

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