Offshoring the Financial Services Industry: Implications for the Evolution of Indian it Clusters

Environment and Planning A 38 (7), 1287-1305, 2006

34 Pages Posted: 25 Nov 2004 Last revised: 23 Aug 2014

See all articles by Michael H. Grote

Michael H. Grote

Frankfurt School of Finance & Management

Florian A. Täube

European Management School; Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, iCite

Abstract

This paper explores the opportunities for existing Indian IT clusters to upgrade and undertake financial research activities. Wholesale financial activity and the accompanying financial research in banks are still highly concentrated in Western financial centers. Increasing competition in the financial services industry as well as regulatory pressure place the options of outsourcing and offshoring activities, especially research, to low-cost locations high on the agenda of financial institutions. For the first time complex tasks at the core of financial activity are offshored which makes it an interesting case for a lot of other industries and their spatial economic organization in an ever globalizing world. Will there be a World Financial Research Centre in Mumbai? Using qualitative interview data as well as a quantitative analysis, this paper argues that research activities are locally embedded in Western financial centers to an extent that such a development is not likely. Two different research activities, viz. country analysis and institutional equity analysis are examined. This analysis shows, however, that there is a certain potential for some research activities to be relocated to India. So far investments take place in very few existing IT clusters which have already gained reputation in the financial community.

Keywords: Financial Services, Offshoring, Outsourcing, India, Foreign Direct Investment, Cluster

JEL Classification: F20, G24, G29, L20, M41, O30, R30

Suggested Citation

Grote, Michael H. and Täube, Florian A., Offshoring the Financial Services Industry: Implications for the Evolution of Indian it Clusters. Environment and Planning A 38 (7), 1287-1305, 2006. Available at SSRN: https://ssrn.com/abstract=623201 or http://dx.doi.org/10.2139/ssrn.623201

Michael H. Grote

Frankfurt School of Finance & Management ( email )

Sonnemannstraße 9-11
Frankfurt am Main, 60314
Germany

Florian A. Täube (Contact Author)

European Management School ( email )

Rheinstrasse 4N
Mainz, 55116
Germany

Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, iCite ( email )

19 Av Franklin Roosevelt
1050
Brussels
Belgium

HOME PAGE: http://www.solvay.edu

Register to save articles to
your library

Register

Paper statistics

Downloads
602
Abstract Views
2,952
rank
44,047
PlumX Metrics