Gartner Says Financial Service Providers Must Use Outsourcing More Strategically to Enhance and Transform Their Business.

NEW YORK -- Analysts and Industry Experts Examine Latest IT Issues, Opportunities during the Gartner Financial Services Technology Summit, August 29-31, in New York

U.S. financial service providers (FSPs) are expected to spend $65.7 million on IT services in 2005, however less than 30 percent of FSPs will outsource any strategic projects by the end of 2006, according to Gartner, Inc.

Gartner analysts announced the findings today at the Gartner Financial Services Technology Summit which is taking place here at the New York Marriott Marquis Hotel in Times Square through Wednesday.

"Most FSPs currently use outsourcing tactically to augment staff for faster project turnaround or to reduce operational costs, rather than for strategic value," said Kimberly Harris-Ferrante, research vice president at Gartner. "FSPs should now begin outsourcing strategic projects in order to gain larger-scale, enterprise-wide value."

"Strategic projects have different dimensions than normal, tactical projects," Ms. Harris-Ferrante said. "They are more complex in that they focus on blending the use of IT outsourcing and business process outsourcing to enhance and transform the organization. The nature of the project requires a different structure of contracts, relationship model and metrics."

For outsourcing projects to be successful, outsourcing must be considered strategic, and it needs to be part of the corporate culture. The company must embrace its use and develop strategies on when and how to use outsourcing effectively.

"Outsourcing success is based on risk mitigation, so FSPs must build a strong strategy to facilitate the use of outsourcing for strategic projects," Ms. Harris-Ferrante said. "FSPs should develop strategies that stipulate how and when outsourcing should be used across the enterprise. Then, proper governance of the outsourcing projects should be established by designating and empowering leadership of the outsourcing project."

To gain maximum benefit from outsourcing, FSPs must fully understand the opportunities and challenges associated with IT outsourcing and business process outsourcing. FSPs should know: when to use outsourcing; how to use outsourcing tactically and strategically; what the best types of projects and processes are to outsource; how to balance onshore, nearshore and offshore alternatives; and how to select the best sourcing partner based on project scope, pricing model, risk tolerance and business outcome.

"If used properly, outsourcing can be a strategic tool to help FSPs transform their organizations, gain operational efficiencies, respond to shifting industry conditions and better meet top-level business objectives, such as increased profitability," Ms. Harris-Ferrante said. "However, if outsourcing is used incorrectly or not properly managed, it is a risk endeavor and can lead to wasted time, money, project failures and business failures."

About Gartner Financial Services Technology Summit

Gartner Financial Services Technology Summit 2005 is the most comprehensive event of its kind designed exclusively for financial services IT executives and their business counterparts with a keen interest in the business value of IT. Gartner Financial Services Technology Summit hits the critical spot between strategic planning and tactical advice for IT organizations in Banking, Investments, and Insurance. This three-day forum looks at the state of IT in the financial services industry, a view of the future, what it takes to be prepared, and the complex IT issues, while laying out the manageable actions needed for success. Additional information is available at www.gartner.com/us/fstechsummit.

About Gartner

Gartner, Inc. (NYSE: IT) is the leading provider of research and analysis on the global information technology industry. Gartner serves more than 9,000 clients, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company focuses on delivering objective, in-depth analysis and actionable advice to enable clients to make more informed business and technology decisions. The Company's businesses consist of Research and Events for IT professionals; Gartner Executive Programs, membership programs and peer networking services; and Gartner Consulting, customized engagements with a specific emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has over 3,900 associates, including more than 1,200 research analysts and consultants, in more than 75 countries worldwide. For more information, visit www.gartner.com.