Industry asks of outsourcing really pays off. (Analysis: Follow-Up on the News)(Technology/Operations)

Industry Asks If Outsourcing Really Pays Off

Farming out data processing operations to computer services firms is one of the hottest trends in the industry these days. But there is a growing debate in technology circles over whether the idea is a key strategic development or just a cost-cutting fad.

Over the last five years, the number of U.S. banks signing so-called outsourcing deals has doubled. Major technology corporations, including International Business Machines Corp. and Electronic Data Services Corp., a unit of GM Corp., have lured some of the nation's largest financial institutions with promises that back-office expenses could be slashed by 10% to 50%. Once only …