news Australia and New Zealand Banking Group late yesterday revealed it would shift 110 Melbourne IT testing staff and a further 250 located in India to employment with outsourcing and consulting company Capgemini, in a bid to deliver what it described as a “step change” in its development operations.
The bank has long operated a major in-house offshoring facility in Bangalore, where it conducts much of its development work, due to the lower cost of using Indian IT staff and the access to a deeper talent pool than is available in Australia. Commentators have highlighted the bank’s maintenance of the facility as an in-house owned operation as a way to ensure the quality of the work done at the facility, as compared with a completely outsourced solution. However, with its shifting of 250 of those roles to Capgemini, ANZ appears to be moving away to some degree from the in-house Indian IT outsourcing strategy it has pursued over the past decade.
In a statement released late yesterday, the bank said the deal was still subject to final contract negotiations and regulatory approvals. It would provide the bank with access to “additional specialist experience, best practice processes, systems and tools in testing and environment services”, it added, as well as providing significant operational flexibility and control to help accelerate its “technology transformation”.
“The partnership with Capgemini will help deliver a step-change by more effectively and efficiently providing the IT testing services that support the delivery of major projects and ongoing technology programs,” ANZ chief information officer Anne Weatherston said. “It will enable us to build world class testing and environment management services to support change for approximately 800 applications and more than 280 projects at a pace that we cannot achieve alone,”
The bank said there would be no job losses amongst permanent employees, the bank said, with staff being offered “comparable roles with Capgemini with comparable entitlements”.
The bank will also consolidate testing services provided by over 40 external providers to Capgemini, it said. The partnership with Capgemini will progressively be put in place from mid-2012, with all impacted permanent staff transferring to Capgemini by the end of the year.
“As part of ANZ’s 2017 technology roadmap, we need to continue to access increasingly scarce IT skills to deliver major projects and ongoing business requirements,” added Weatherston. “Building a hybrid technology delivery model will help us achieve this by matching our internal capabilities with partnerships with best-in-class technology vendors such as Capgemini.”
ANZ’s move is just the latest in a large wave of IT outsourcing activities which are impacting banks and their workers across Australia. In December 2010 National Australia Bank reportedly confirmed plans to shift some 425 IT staff to IBM, and Westpac has been engaged in similar initiatives over the past year that have already affected hundreds of IT staff and may affect many more.
opinion/analysis
It’s not a good time to be working in Australia’s banking technology sector, unless you work for the small number of major banks which aren’t engaged in major IT outsourcing initiatives seeing hundreds of staff transferred. Basically, at this point, if you want job security, I’d advise you to work only for CommBank or Suncorp — every other major Australian bank appears to be handing jobs to IT outsourcers like IBM and Capgemini, not to mention the Indian IT outsourcers, at a rate of knots.
Perhaps coincidentally, it is really only CommBank and Suncorp which are engaged in visionary IT development initiatives at the moment. NAB is getting there, but has never quite signed up to the rhetoric around the revolutionary potential of core banking system overhauls, and of course Westpac and ANZ are taking a much more measured approach to their banking systems.
It seems as if right now, in Australia’s banking technology sector, the banks are split between those who see technology as a revolutionary change enabler, and those who see IT primarily as a cost centre. It’s not hard to see where ANZ fits on that spectrum.