Credit crunch is driving IT outsourcing in Financial Services sector, says Connect

11 August 2008

Connect, the IT support company for SMEs, has today revealed new figures that show IT outsourcing in the Financial Services sector is gathering pace as a direct result of the credit crunch.

Mark MacGregor, Chief Executive of Connect, said:
“Since the start of the year, we have seen a 75% increase in the number of enquiries for IT support, with companies in sectors most affected by the credit crunch – notably Financial Services – leading the way. The increase in enquiries is particularly marked in mid-sized companies with 50-500 employees, where the cost of their own internal IT department is seen as an overhead they can reduce or eliminate speedily.”

MacGregor believes that the main driver for this surge in interest is a desire to reduce headcount, but that the greater flexibility available from outsourcing is also an important factor.
“Outsourcing is an obvious way to save money quickly - but many FDs are also interested in finding ways to increase or reduce IT support to match the growth or reduction in their own employee numbers. For some clients who want to retain some capacity inhouse, we have designed specific packages that allow us to take over, for example, server or third line support, leaving the customer to continue with the simple fixes.

“We have also seen increased interest in any service where finance companies pay a monthly fee - rather than having incur to large upfront capital expenditure. Connect’s online backup service is a classic example – instead of having to find large sums to pay for mirrored servers, firms can back up all their data for a fixed monthly fee, starting at just £83 per month.”

However, Macgregor also had a warning for finance firms looking to follow the outsourcing path.
“Outsourcing can be an attractive option but companies need to be careful. It is an old truism that you should not outsource a problem and expect it to be magically solved. It is vital to spend the time at the start of any contract getting your IT strategy and processes right – only then can you have any confidence in successfully transferring your IT function to a third party.”

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