Outsourcing of financial services jobs to Third World countries is going to increase over the next six years, according to British management consultancy Troika. It says 100,000 UK financial services jobs will be carried out in offshore locations such as India, China and South Africa by the end of the decade.

The warning is also significant for Australia, where some companies are already using Indian-based call centres and IT companies within the local market. MD Andrew Stewart says insurers “operating in a 1% world” will have to make radical changes in distribution and costs to stay competitive. “Financial services-providers will need to ring-fence existing businesses and create new business models for the future – more efficient ‘virtual companies’.”

He says such efficient processes are likely to include outsourcing and “offshoring” to India and South Africa, where costs are roughly $23.61 per policy, compared with $70.80-plus for policies processed in the UK. China will be even cheaper within five years. “With the advent of reliable and cheap global communications and the emergence of skilled quality labour forces in developing countries, remote offshore services have become both feasible and real.”