Citi slashes IT

Here's an article on Citi's current strategy for cost-cutting. The cuts would be mostly on cost-center of Citi - IT. This was bound to happen - the firms were just getting their feet wet (or maturing the relationship with the service providers) in the last 3 or 4 years. This is backed by evidence from a previous article pointing to a Deloitte survey in 2003.

While helping students think through their offers (at MISM), I had always asked them to assess profiles based on nature of job, what they want, etc other than just the pay. When it came to financial firms, one of the dimensions I asked them to consider was whether they were a part of the revenue drivers for the firm or the cost centers for the firm. If they were the cost-centers then there is a possibility that they will have to face one of these days (where they face the axe) !

I get some pleasure in seeing that my thought process was in the right direction. However, I feel sorry for those who will be under the axe because of this step by Citi.

The article highlights on them using offshore services providers ! Election year has come and we will see increasing backlash against outsourcing. However, for global firms such as Citi - it doesn't make sense to run operations from here if they can be done cheaper in some other location on the globe and is able to do so with reasonable SLA adherence.

However, outsourcing need not be the only option. Use of ITIL concepts and other best practices can help reduce costs and make IT more agile and competitive as well. Besides, mindset of converting these cost centers to revenue centers with the existing staff will help achieve the golden middle path - however, that would take more time than Wall St. can wait before next quarter or year ! Also, that would involve significant re-training of existing folks.

Outsourcing, if undertaken, must adhere to eSCM-CL principles developed at ITsqc by an inter-disciplinary set of researchers led by Bill Hefley ! It is a near-complete model w.r.t. dimensions to think about when it comes to Sourcing initiatives.

On an arbitrarily tangential note, a good choice to go long on would be Indian services stocks - which heavily serve these folks. Long live Indian service providers !

global sourcing

Mellon bank's senior officials visited CMU for a presentation on Global Sourcing. They wanted insights into what incremental innovations they can make in order to add productivity, security, performance, and nurture further relationships with their vendors, namely, CTS and INFY. The representatives from both CTS and Infy were present there. I had a talk with Ajay Bhandari, Sr. Engagement Manager from Infy thereafter on some other dimensions.

I could think of application of ATAM from SEI for architectural evaluation by Mellon and Octave from Cylab. Besides, all my productivity tips will go straight to their wiki and cannot be discussed any further. Its interesting to know that this was part of curriculum for a grad education program. Besides, the crowd also provide some other strategic insights for certain cultural aspects. I must appreciate the step forward from Mellon to place a Mellon personnel at offshore DC to be their eyes and ears for the sourcing initiative to be successful.

eSCM certifications are now happening both for service providers as well as clients. These are conducted by ITSqc or IT Services Qualifications Center. Global Sourcing is maturing to the next level. More on the topic later...