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RBS CIO warns of losing offshored staff to Google and Facebook

Derek du Preez | Dec. 18, 2012
Royal Bank of Scotland's CIO of Markets, Scott Marcar, has said that the bank's offshored technology centre in Delhi, India, could experience staff retention problems in the future with the influx of internet giants, like Facebook and Google, that are looking to hire.

However, Marcar highlighted that getting to the stage where the off-shored centre is sufficient has taken a significant amount of time.

"In my experience it takes time to get the quality, to build up the institutional knowledge of what an investment company is and how the technology runs within that. I think it took us five, maybe even six years, to really see the benefit of that investment," said Marcar.

"I think a lot of companies in that time period would have come in and out, and tried to move to the next cheap place, like China or the Philippines."

He added: "Six years down the line we are starting to see some real benefits -- people who understand the systems."

Watching wage inflation carefully

Wage inflation in India, which Marcar said has been at 11-12 percent over the past two years, is also of concern for RBS. Although this has been balanced by changes in the pay in London's technology industry, it is likely that the cost saving gap from wage difference will shrink going forward.

"Wage inflation in India is high, but in the technology industry in London we have seen a similar wage inflation that has been driven by the huge amount of regulatory change in the industry. As such, we still see a 6:10 ratio of costs from India to the UK."

He added: "However, I don't think that will persist because it will become uneconomic. We will start to see some wage deflation in London and then we need to genuinely focus on whether that gap with London and India is closing."

Earlier this year RBS suffered a major IT failure where its customers couldn't gain access to funds in their bank accounts after a botched upgrade that was made to batch processing software CA 7 from CA Technologies, which impacted some accounts for more than a month.

It was revealed that it was RBS' Edinburgh-based IT staff that were responsible for the systems failure, which contradicted earlier media reports that claimed a junior IT worker based in India had made the error.

The bank has revealed that costs relating to the failure will reach at least £175 million.

 

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