As we all know, the BFSI sector has been extremely turbulent over the past year. Vast mergers and acquisitions, government bailouts and collapses have all resulted in the industry looking at how best to deliver quality while increasing efficiency.

As a result, many organisations are considering outsourcing certain processes within their business. Everest’s recent Market Vista report shows that the BFSI sector had the greatest amount of outsourcing activity in Q1 2009. The majority of the activity has been smaller outsourcing transactions as organisations look to invest in deals that produce quick results and improve bottom lines.

Within the financial community, the back office tends to be the first place an organisation considers for streamlining and outsourcing. Costly IT infrastructure can also be a prime place to begin an efficiency strategy. However, outsourcing is not a fix all answer to cutting costs and improving profits. Companies with reduced profit margins should be wary of jumping straight into an outsourcing deal before weighing up all the options. Some organisations can benefit from outsourcing processes however, others may find that a change in internal strategy may be a far better option; it is utterly dependent on each organisation’s needs and overall strategy.

Of course, outsourcing conjures up significant unease amongst the public. Organisations looking to outsource in a downturn have to be wary of public and media backlash. The BFSI sector is particularly prone to feeling the wrath of the public, especially as their confidence in the BFSI sector is at an all time low.

Banking institutions and other financial organisations may have had a significant injection of government/public money. This will be used as cannon fodder by the media and the public if such an organisation decides to outsource or even offshore work. Banks now have even more responsibility to run effectively, be efficient and drive quality.

It is important to get across the fact that government money was not injected into banks in order for them to bring all their work back home, if that was the case we would find even more organisations heading for closure. The money was lent to fuel cash flow, kick start the economy and increase liquidity. It is now imperative that the banks take responsibility for this money by ensuring that they are delivering the best services in the most cost efficient way, without jeopardising quality. This may mean that a bank needs to outsource or offshore to achieve these objectives.

We are in a global market and outsourcing will undoubtedly increase across all sectors and those that have been significantly affected by the recession will look to use the strategy more. As long as the outsourcing of processes is done well, all economies should benefit. Sceptics and anti-outsourcing evangelists must realise that organisations have to run as efficiently as possible if the economy is to see a significant improvement.