Report: Lenders Save 2 - 4% by Offshoring
Offshoring and offshore outsourcing to India and other countries will ultimately reduce total direct loan origination and servicing costs by 2% to 4% by 2010, according to Tower Group here.
However, Craig Focardi, author of the Tower Group report and a senior analyst in the consumer lending and bank cards practice at the company, advises looking at offshoring as more than a cost-reduction proposition.
"Offshoring in India or in any other developing region of the world is a strategic business decision, not a tactical operating cost decision, because it requires large, long-term capital and management resources. Before jumping in headlong, institutions should consider the full spectrum of cost-reduction strategies available to them," he said.
As previously reported, Tower Group believes that moving business processes offshore and outsourcing to offshore companies in India and other countries will help U.S. mortgage lenders lower total origination costs per loan 6% by 2008.
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