Industry Goes Heavy on Outsourcing

The insurance industry, which has lagged behind others in outsourcing business and technology processes abroad, is now the fastest growing offshore service sector with a CAGR of 33%.

Overall, global insurance outsourcing is growing at a CAGR of 8%, expected to become a $24 billion industry next year. Onshore sourcing relationships are the favored destination of 91% of insurance firms, while 9% elect to have suppliers from abroad. However, that mix is shifting offshore at a breaking pace.

Black Book findings for the Insurance Industry include:

Nearly three-quarters of global insurers currently use at least one information technology outsourcer and one business process outsourcer;

U.S. outsourcing vendors are preferred by 9 of 10 U.S. insurance users/clients. Offshore data security, the complexities of managing risks, cultural barriers, compliance requirements and reliability are still viewed as offshoring drawbacks by 95% of insurance users. 96.6% of onshore clients state they would consider offshore vendors if these issues manifested improvements.;

System modernization, process transformation and innovation dominate sourcing agendas as the key drivers for vendor selections - more than the cost based benefits of recent years, as risks from service interruption, customer data, information security and privacy exposures far outweigh any benefits from cost reduction to insurers;

IBM Global has made a clean sweep in all Insurance Industry outsourcing domains of Information Technology Outsourcing, Business Process Outsourcing, Call Center Outsourcing and Knowledge Process Outsourcing;

The achievement of cross-domain top honors in all the major categories in a single industry or vertical by IBM Global's collective outsourcing divisions is the first time any single vendor has accomplished full industry dominance in a Black Book client satisfaction survey since its inception in 2004;

About one out of five IBM Global employees are now located in India including over 20,000 in its Indian BPO division, IBM Daksh serving both core insurance systems and front office processes.

Scott Wilson, partner of Brown-Wilson Group, which authors The Black Book of Outsourcing, stated, "The Black Book award, completely based on client experience and satisfaction, is an acknowledgment of the culture of excellence IBM has created within the Insurance Industry and their sustained efforts in offering their insurance industry customers the best sourcing experience through a combination of people, process and innovation excellence."

A full complimentary copy of the report, featuring over 100 Insurance Outsourcing vendors, can be downloaded at www.theblackbookofoutsourcing.com/resourceslinks.htm.