Offshore outsourcing poses serious risks for brokers

MASSACHUSETTS - A report issued in March by Massachusetts-based consulting firm TowerGroup - Offshore outsourcing onslaught to impact brokerage spending, staffing, and service landscape - examines how growing numbers of US securities firms are opting to outsource IT and administrative functions to overseas companies, especially in India.

But while these financial institutions stand to reap financial and strategic benefits by outsourcing non-core functions, an expected gradual shift of trade processing functions overseas could eventually expose them to op risks.

TowerGroup senior analyst Dushyant Shahrawat, author of the report, explains that until securities firms begin outsourcing more mission-critical operations, a significant number of them seem willing to take on risks associated with moving back-office and IT operations

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