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Offshore Outsourcing of Data Services by Insured Institutions and Associated Consumer Privacy Risks

Chart 2

Chart number 2 is titled "The Costs of Offshore Outsourcing Dramatically Change the Savings Equation." This chart is derived from the TowerGroup and presents ranges for potential savings, less ranges for costs of offshoring and then shows ranges for results of actual savings for both information technology outsourcing (ITO) along with business process outsourcing (BPO). For ITO, the potential savings are from 35 to 50 percent. The costs for due diligence (3 - 5 percent), IT governance (9 - 13 percent) and risk management (3 - 5 percent) combine to reduce the potential savings to an actual savings range from 20 to 27 percent. For BPO, the potential savings are from 45 - 60 percent. The costs for due diligence (7 - 9 percent), IT governance (12 to 15 percent) and risk management (8 to 10 percent) combine to reduce the potential savings to an actual savings range from 18 to 26 percent.



Last Updated 6/08/04 insurance-research@fdic.gov