FSIs are sensitive to the political controversy surrounding offshore outsourcing and are reluctant to relinquish control to countries with patchy intellectual property protection. Therefore, they handle offshore work in such locations via a captive outsourcing model whereby they own the operations.
The Chinese government, foreign investment and a large domestic FSI market are fuelling China’s offshore outsourcing potential. TowerGroup estimates that this market will grow 73% annually between 2004 and 2008, mostly in the area of IT.
Guillermo Kopp is director and Virginia Garcia is a senior analyst, financial services strategies & IT investments, at TowerGroup.
