......our answer to all your banking needs


Follow AllBankingSolutions


    Follow allbanking on Twitter


Ads by Google


V Subramanian, Senior Manager, Andhra Bank [ ]


Nowadays, we very often hear about outsourcing of bank jobs in India.  What are their implications and intricacies?  What are the benefits accruing and risks involved, if we encourage it?  Why do the Trade Unions oppose it tooth and nail?  Why are the Government of India, Reserve Bank of India and Indian Banks Association very particular about outsourcing of bank jobs?


Let us try to find answers to these questions.


Benefits accruing from outsourcing :


  1. (a) At present, the average age of a permanent bank employee is more than 45.  Moreover, there are a lot of restrictions placed by the RBI and Ministry of Finance on fresh recruitments in banks. (Many healthy banks enjoy autonomy which remains only on paper).
  2. (b)  Recruitment of new personnel is a long and time-consuming process and for immediate needs, outsourcing is the best option.
  3. (c) The cost of outsourcing is very cheap as compared to the average cost of hiring a permanent employee.
  4. (d) The persons so employed through outsourcing usually exhibit a polite and humble behavior and they listen to the bank officers and the customers.
  5. (e) They cannot form trade unions and hence, they will not strike work paralyzing the bank functions.
  6. (f) If the efficiency or performance level of the outsourced staff is not satisfactory, their services can be terminated any moment without prior notice.
  7. (g) It is easier for a bank to maintain the same size of manpower so that there will not be any undue shift or fluctuation in the work load for an average worker.  
  8. (h) From the customers’ point of view too, they will get their things done without any delay or hassles. If some outsourced persons go on leave, there will be a panel of persons waiting to perform their jobs.
  9. (i) Outsourcing for temporary needs is also possible.
  10. (j) In case of mergers and amalgamations of banks in future, the outsourced persons can be terminated easily, without any legal claims and disputes and financial burden to the banks.
  11. (k) On one side, the reality of lakhs of bank employees/officers retiring in the next 2 to 3 years is staring on our face and on the other, no bank (except SBI) is prepared to face this eventuality, considering the record of new recruitments made by them during the past few years.  In such circumstances, outsourcing is inevitable.





Ads by Google


Risks and Dangers involved in outsourcing :

  1. (1) Despatch is one area that was already handed over to courier service agencies in the 1980s.  We often hear of pilferage of Cheques/DDs/Dividend Warrants while in transit.
  2. (2) There is no proper screening of agencies who are entrusted with outsourcing of bank jobs.  Many agencies short-listed and selected are not run on professional lines.
  3. (3) The antecedents of the persons deputed to the banks for performing outsourced jobs are not verified properly and thoroughly.  Nobody is bothered about this as of now.
  4. (4) Banks now outsource many of their jobs like ATM Management, Telebanking, Customers’ Complaints Redressal, Debit Cards and Credit Cards issuance, Billing, Records Maintenance and Management.   But, how many possess sound knowledge of what they are doing? Or do they have all-round experience in that filed?
  5. (5) Banks have been engaging the services of private security guards for branches and ATMs.   Are not the banks aware that only 60% of what they pay reaches the guards?
  6. (6) The outsourced staff themselves pose risks and threats to the banks they are associated with. There were so many incidents in the past in every bank to prove this.
  7. (7) There is no guarantee that the same set of people will be deployed every day or at least for a period of 6 months continuously.  Therefore, it will be difficult to have an effective surveillance on their movements and activities always.
  8. (8) There will be a great deal of uncertainty as to who performs what job.  Regular staff cannot be suddenly asked to perform the jobs outsourced on a regular basis.   
  9. (9) Since the agency pays them only a pittance, as compared to a regular staff member doing the same or similar job, there will be no motivation and loyalty for the outsourced persons.       
  10. (10) They will quit their present job at the earliest opportunity of getting a better job.
  11. (11) The persons outsourced are not properly trained to handle a variety of related tasks.  They are made to perform only one type of job, all the 365 days of the year.
  12. (12) As they do not have basic idea of how a bank branch works, they cannot handle the customers with ease and confidence.
  13. (13) The persons outsourced themselves do not have proper knowledge of the risks involved in the functions handled by them.  Many a time, it is observed that they commit some grave mistakes or blunders, landing themselves and the bank in a precarious situation.  It is very difficult to clear the mess created by them and recover the loss attributable to them.
  14. (14) By virtue of their long association with the regular staff, some of them gain access to the User IDs and Passwords of regular staff in course of time.  This gives them the courage to commit frauds and indulge in other types of mischief and irregularities.
  15. (15) These are the improprieties commonly noticed –

(a)       Transferring funds from dormant accounts to their own accounts with other branches/banks.

(b)       Cheating illiterate and gullible customers by withdrawing more cash from their accounts than asked for and retaining the difference.

(c)       Some outsourced personnel are encouraged to handle regular work at the counters by the branch managers themselves, due to acute shortage of permanent staff.

(d)       By introducing themselves as regular staff to the strangers and newcomers, they collect cash from them directly, but remit only a portion of it to their account and swindle the remaining amount.  In case of customers who have not registered for SMS Alerts, they cannot find out this mischief/fraud immediately.

(e)       In case of security guards accompanying cash meant for replenishment in ATMs and those entrusted with the duty of guarding the ATMs, some of them indulge in serious crime of decamping with huge cash even by assaulting other staff/general public.


My Views:


  1. (A) It is a crime against the society to deny employment opportunity to the millions of aspiring youth, on a permanent basis.  Remember, ours is the second most populated country with great degree of unemployment or under-employment.
  2. (B) The banks are earning huge profits with which a few hundreds of additional vacancies can be filled in every year on a permanent basis, without any financial strain.
  3. (C) Creating new, regular employment on a large scale will contribute to higher national income, additional demand for goods and services, growth in GDP and collection of taxes.
  4. (D) Myopic ideas of a few bureaucrats and politicians shall not encourage outsourcing of persons for doing regular work. 
  5. (E) The gains accruing from employing people on a regular basis far outweighs the gains/savings arising out of outsourcing.

Therefore, my vote is clearly against outsourcing.  How about you?



Disclaimer : The views expressed here are the personal views of our readers and and the organisation where the author is working / has worked,  may not  at all subscribe to such views.  The contents or data has not been verified / re-checked.  In case, any abuse is noticed, the same may be brought to our notice at so that we can review the same.


You can give your feedback / comments about this Article.   Please give only relevant comments as irrelevant comments are waste of time for yourself and our other readers.



blog comments powered by Disqus