Standard Chartered's BPO to prune vendors, save $7 mn

 Standard Chartered Bank's wholly-owned subsidiary Scope International Pvt Ltd hopes to save $7 million per year by pruning its IT vendor base to three or four by the end of March, a senior official said.

The city-based Scope International is the business process outsourcing (BPO) arm of Standard Chartered with around 8,500 people lending support to the bank's various operations, including IT.

"We have taken a critical look at the IT service and the vendors. We will continue to handle in-house the core IT services that are IP (intellectual property) driven and critical for banking operations while commodity services will be parceled to couple of big vendors instead of having multiple small vendors," said Jaya Vaidhyanathan, executive vice president and head, Chennai Technology and Strategic Transformation, Global Shared Service Centres (GSSC).

Nearly 60 percent of Standard Chartered's IT needs are met in-house -- including the bank's core banking solution (CBS) -- while the balance is outsourced.

According to Vaidhyanathan, the technology division here employees around 4,500 people out of which nearly 35 percent belonged to the vendors.

"The total annual payout to vendors is around $70 million and we hope to save around 10 percent of that through our vendor consolidation initiative," she said.

She said the company is in the last phase of the vendor consolidation activity and hiring of new service providers and the firing of smaller players will happen by the end of the first quarter of the current calendar year.

A year back Scope International had around 55 vendors comprising small IT companies providing as low as five people and going up to 200 hands.

"After consolidation we will have three or four big vendors. We will also hire on our rolls those people whom we consider are crucial but employed by the vendors," Vaidhyanathan said.

Explaining the rationale for the initiative, she said: "Apart from the economies of scale resulting in lower costs, we will be able to monitor the progress of the projects handled by the vendors. Further, the vendors will also know the kind of projects that are in the pipeline and accordingly allot good talent for us instead of those who are on their bench."

She said the company will also phase out some IT activities whose benefit does not justify its cost.

In addition, Scope International will also save on lease rentals as it will not need the space.

The Chennai centre started nearly 12 years ago as Standard Chartered's captive back office taking advantage of the cost arbitrage India offered. However, it has now grown to become the fulcrum of bank's IT operations and the biggest GSSC for the bank.