With technology becoming the core for business growth, global companies are focusing on ramping up in-house capabilities. UK's leading banking and finance firm HSBC have not only ramped up its Indian development centre but has also rationalised its technology vendors.
Richard Herbert, CIO, HSBC global banking and markets in an interview with Business Standard said that the bank has rationalised its vendor relationships from hundreds and is now down to 20.
"I would say we are 90 per cent in-house company when it comes to technology talent. We do work with a few large IT firms from Indian. I have tried to rationalise that over the last two years so that we are more focused and build a partnership with people employed by the Bank here," said Herbert.
HSBC's investment banking technology department has a total global headcount of around 6,500 and supports seven investment banking units; 2,500 investment banking technologists are based at their technology centre in Pune, India.
To highlight this focus on India and the work that is being done, HSBC recently held an internal conference for its technology teams across the world. The conference called 'GBM Does?An Enterprise Technology Summit' saw a total participation of 135 people. While 65 were from the Pune centre, the rest were flown from across the globe.
Herbert also said that unlike several of the global investment bank and banks, in general, have employees working out of India, HSBC has taken a different approach. "We are changing our operating model. I do not think it's unusual for investment banks to have employees working in India, but we are changing our operating model we are not only adding more people in this part of the world but we are also changing their interface with the rest of the organisation, so that we have a much more connected organization," he added.
At present some of the operations that have a large presence out of the Pune centre include the Bank's collateral activity, India has a strong presence in the finance team, and in managing the middleware operations. "Increasingly I expect to have a large focus of market operation activity from here as well," he added.
Herbert also added that going forward, global banks and financial institutions may follow what HSBC is already setting-up, that is to reduce work with third-party vendors and create in-house or captive capabilities.
"Every vendor has to make a profit, and I have to pay tax for the work that goes into them. This means that we could end up paying 100 per cent more when that same amount could invest our employees. Moreover, it's about the domain, it is about having the understanding. Technology is about business and how you apply to it. The more people I can have in this location, I can create more career paths, and create a continuity for the business. On the way, if I lose a few that's fine. Whenever I add vendors to that, I am diluting that opportunity," said Herbert.," said Herbert.
However, he also gives the example of how HSBC is using one of the top-five Indian IT players for its equity derivatives processing system on Sophis. "We are going through a simplification programme and we are working with one of the big five vendors from India. Once that is done, they will maintain it. That is an example where the vendor role is more relevant for us."