While many observers bemoan the loss of American technology jobs to offshore outsourcing firms, the insurance industry never has jumped with both feet on the outsourcing bandwagon.

A study conducted by research group Celent showed 2006 budgets for large life insurers included only 17 percent of IT funding directed toward outsourcing. For medium-size carriers, the number was even lower–11 percent. Those insurers utilizing outsourcing mainly have good things to say about their experience, and consultants also sing the praises of outsourcing. With the rest of the IT world normally a step or two ahead of the insurance industry, it seems likely insurance IT outsourcing will rise considerably before the end of this decade. So, what should carriers that thus far have resisted the lure of outsourcing look out for? Saving money is the siren song for most, but those that have studied the issue believe there are greater benefits to be achieved than simply dollars.

The first thing the consulting firm eGlobal CIO does with a client interested in outsourcing is to understand what the company seeks to accomplish from its outsourcing relationship in terms of objectives and expectations. Bruce Skaistis, founder of the firm, explains companies invariably start out with the view they want to save money, and he believes this is a reasonable desire.