Boston, Bangalore, Beijing, Budapest, or Buffalo

June 2009
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FS viewpoints: Boston, Bangalore, Beijing, Budapest, or Buffalo: The United States as a low-cost location and the implications for financial institutions

At a glance

Changing market conditions have overturned preference for and the suitability of sourcing locations for financial institutions. This leaves the US in a relatively better position for consideration as a low-cost location than it has been in years.

 

Boston, Bangalore, Beijing, Budapest, or Buffalo: The United States as a low-cost location and the implications for financial institutions

Changing market conditions are shifting the preference for and suitability of sourcing locations. The U.S. is at its most favorable as a strategic destination, particularly for financial services institutions.  

Many traditional outsourcing locations have undergone profound macroeconomic and geopolitical change (e.g., wage inflation, currency appreciation/depreciation, political instability, and skills shortages), undercutting their longstanding dominance as market locations of choice for sourcing.  

In addition, the following are gaining prominence as factors in the selection of an offshore location:
  • Heightened awareness of geopolitical and privacy risks
  • Constraints on the low-cost model
  • Mixed client experiences with sourcing
  • Market conditions in the financial services industry and resulting government intervention
Together these factors make the U.S. an increasingly attractive location for sourcing.