A new report reveals that India is one of the hottest destinations for financial companies looking to outsource their back-end administration processes.

Almost a fifth (19%) of financial institutions already outsource their business processes, with banks leading the way - over 44% entrust their electronic payments, bill queries, customer service and call centres to other countries.

India already enjoys a 16% slice of this lucrative market, with 25% of banks spending between £5 and £20 million on outsourced services each year.

Banks are not alone, 10% of Insurance companies also spend well over £20 million on such activity, although the majority are still just "dipping a toe in the water" with expenditure of no more than £500,000 per annum.

The research conducted by Metrica, on behalf of e-funds International Ltd a technology company specialising in financial services, showed that a massive 68% of companies surveyed outsourced their needs for cost savings; 42% for greater efficiency and better time management and 32% to enable them to concentrate on core activities.

It was also revealed that attitudes to using India and its citizens were very positive. Four out of five respondents (80%) agreed that local staff are very cost effective and that India has a large and well educated graduate workforce, many of whom have the necessary skills for IT and business processes. A barrier to India - concerns over language and cultural difficulties - was one that didn't stand up with just 20% expressing reservations.

"The e-revolution is constantly shrinking the world, cutting out geographies and time zones easily," says Ron Drake, managing director, EMEA, eFunds International. "This brings countries like India and its many benefits closer to us here in the UK. This includes, most importantly, a large resource of educated English-speaking skilled staff.

He added, "Quality is an important issue. Many call centres in the UK experience high staff turnover and low job satisfaction, which means that, sometimes, new recruits with very little training are the first point of contact with customers or prospects. In India graduates are employed and trained for over six weeks before starting any job."

The study was conducted in August 2001 using telephone interviews with CEOs, heads of organisations and key management decision-makers from 100 of the UK's top 200 banks, investment houses and brokers, insurance companies and other financial services companies.

The results make depressing reading for UK workers. The cost savings, efficiency gains and improved time management mean that jobs are undoubtedly being exported overseas. The outsourcing industry is also set to grow spectacularly for the next five years, despite a global economic recession, perhaps, even because of it. "The competitive nature of business means that the most successful companies will be those with an unbeatable service proposition that retain and attract customers" explained one respondent.

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