A recent study by Deloitte called Global Financial Services Offshoring: Scaling the Heights contends that while top global financial institutions that have offshored, report cost savings of up to 60%, the worst performers saved less than 20%. The winners have typically offshored multiple functions and have benefited from their captive setups in terms of cost savings and service quality. The laggards, on the other hand, have been bogged down by their lack of scale — having offshored only a single function.

The average scale for offshore operations is 3.5% of global headcount, which is far below the 6.7% average reported by top performers. According to the study, collectively these companies can reduce their annual cost base by around $16 billion — more than trebling the current savings of $5 billion.

The solution that is prescribed is “scale or fail.” It recommends increasing the scope of offshoring by sending multiple functions or full services offshore. Based on the experience of companies that have offshored for more than five years, it also suggests adopting a mix of “re-engineer-and-move,” “move-and-re-engineer,” and “build-operate-transfer” strategies. The study discovered that nearly three in four financial institutions it surveyed, use a “lift-and-shift” strategy, something that pays off in the initial years, but is difficult to continue with, as the operation attempts to expand. It also recommends scaling operations through increased offshore headcount, suggesting that doubling the size of an offshore workforce can double total savings provided, the level of efficiency is maintained.

Deloitte’s bottom line: Don’t dabble offshore — stay home if you are not committed.