This is not surprising news, given that major global players in the industry such as HSBC, Standard Chartered and Citibank have established SSO centres on our shores. Regional players such as Maybank, CIMB and OCBC have also outsourced certain operations here to increase their productivity levels. We are happy to have them here today to share their experiences and perspectives. It would not be presumptuous of me to say that the financial institutions in Malaysia are in an enviable position where SSO is concerned in view of Malaysia's standing as a leading destination for the establishment of SSO hubs. A.T. Kearney ranked Malaysia as the third most attractive outsourcing centre in their Global Services Location Index in three consecutive reports, including this year's index. The report states that Malaysia was a "natural choice" for outsourcing in view of its low costs, modern infrastructure, business environment and high levels of global integration. Frost & Sullivan ranked Malaysia as the fifth most attractive SSO location in 2007 whereby the finance sector was identified as one of Malaysia's niche areas, ranking fourth in this sector. Key strengths that they pointed out include infrastructure quality, favourable Government policies, political stability and cultural adaptability of skilled workforce. Indeed, the Multimedia Development Corporation has implemented various initiatives in developing the Multimedia Super Corridor or MSC Malaysia as a conducive and attractive environment for outsourcing activities. Leveraging on these competitive advantages of Malaysia would seem to be a natural progression for financial players who are looking to stay ahead of the game.
Back office operations, important as they are, can prove distracting in managing a financial institution, where the focus should firmly be on the heart of the institution's business. Outsourcing arrangements can lighten the load of such a burden and these operations can often be performed more effectively and efficiently by skilled outsourcing providers than if performed in-house. Ladies and gentlemen, The essence of a successful outsourcing arrangement rests on the institution's overall strategy. In executing a successful outsourcing strategy, the various risks involved have to be recognised and mitigated. Controls and effective oversight on the external parties have to be put in place to ensure that there is no over-reliance or loss of an institution's control. Clarity on roles and responsibilities is paramount. Outsourcing strategies which maximise rewards and minimise risks can prove invaluable to an institution in enhancing its competitiveness. Therefore, a key to this is to conceptualise the outsourcing approach and early identification of the gains and pains that may arise. Bank Negara Malaysia , in our efforts towards facilitating the development of stronger and more focussed institutions in the financial sector, will endeavour to reconsider any regulatory barriers deemed to be impeding the outsourcing arrangements of banking institutions and insurance companies in the future. Our only wish is that the outsourcing arrangements should not in any way affect stability in the financial system. On that note, I wish you a productive and successful forum. Thank you. 2  BIS Review 133/2007