Banks to move back office jobs to developing countries

Two million financial services jobs in developed economies are at risk as employers shift back office functions to cheaper centres abroad, research by Deloitte Consulting suggests.

The move offshore is expected to save $365 billion in the financial services industry in the next five years, the report says.

Some of the main beneficiaries are likely to be countries on the 'Indian Ocean Rim', including India, China and South Africa.

Christopher Gentle, the author of the report, said jobs in the City of London would also be lost to Eastern Europe and Ireland, where wages are lower.

Some North American jobs would be lost to Central and South America. Japanese jobs in particular would be lost to China.

Different locations have different advantages. India has a low cost base, but poor infrastructure.Australia, hardly the stereotype of a low cost centre, is likely to attract back office jobs in several investment banks as it has a favourable tax system, Gentle said.

The research covers banks of all kinds and other financial services firms including insurance companies. Jobs expected to move offshore include application development, coding and programming, accounting and finance, operations, processing and administration, contact support and call centre operations.

Cost advantages may be eroded if firms target the same cities. Wage inflation in Bangalore, India's prime IT location, has hit double digits in recent years.