85 Percent of Insurers Outsource Some Element of Information Technology

A new report by research and advisory firm Novarica, based on a survey of over 100 US insurer CIOs, finds that 85 percent are currently outsourcing at least some elements of IT, and between 25 and 35 percent are planning to increase their level of outsourcing in 2012.

“Insurer CIOs across the industry are embracing outsourcing and blended staffing strategies in order to enhance productivity without increasing fixed overhead,” said Matthew Josefowicz, partner and managing director of Novarica. “With the imperative to ‘do a lot more with a little more,’ blended sourcing can help insurers stretch their IT resources.”

Among the key findings of the report:

• 85 percent of insurers are using at least some outsourcing services today in either variable staffing/staff augmentation, legacy application maintenance, or data center or infrastructure management.

• Large insurers outsource more than 25 percent of their IT work, while small and mid-size companies typically outsource only 15 percent of their IT work.

• More than a quarter of large insurers are planning to increase their reliance on outsourcing in variable staffing, legacy application maintenance, and data center/infrastructure.

• Midsize and small insurers are twice as likely to see a high value in data center and infrastructure management outsourcing than larger insurers are. About a third of the respondents intend to increase infrastructure outsourcing, regardless of company size.

Source: Novarica