1. 1 Sourcing Strategies Leo Kwok40034280 Gaargi Sharma51485416 XING Sang, Shania 51159740 Tsang Wan Ching, Venice 51466936 Kwok SiuChun,Vincent 51442023

2. Agenda 2 Introduction Process outsourced by Citigroup Decision making process Outsourcing considerations Risk involved Comparison of expected outsourcing strategies & real situation Competitive Advantage brought by outsourcing Recommendation Conclusion

3. 3 What is outsourcin ? Outsourcing The practice of contracting out a business function previously performed in-house to an external provider

5. 5 Reasons to outsource Cost advantages Focus on core competencies Improve overall efficiency Increase customer satisfaction Gain competitive advantage

6. 6 Outsourcing Lifestyle Model Building block 1 Investigate Building block 2 Target Building block 9 Refresh Building block 3 Strategize Building block 8 Manage Building block 7 Transition Building block 4 Design Building block 5 Select Building block 6 Negotiate

7. 7 Citigroup Inc. American multinational financial services company based in New York City. Formed from one of the world’s largest mergers in history by combining Citigroup and Travelers Group together on April 7th, 1998. Over 200 million accounts spanning 116 countries. Primary dealer in US Treasury securities. One of the “Big Four Banks”

8. 8 Citigroup and Tata Consulting Services Tata Consulting Agency acquires Citigroup Global Services for $505 million on Oct. 8th, 2008. $2.5 billion contract providing outsourcing services, application development, and infrastructure support to Citigroup and its affiliates for the next 9.5 years.

9. 9 Processes outsourced by Citigroup

10. Processes outsourced by Citigroup 10 CGSL services five of Citigroup’s nine product lines in more than 45 countries:

11. Processes outsourced by Citigroup(Con’t) 11

12. 12 Decision making process for outsourcing

14. 14 The decision making process II Indentify sourcing strategy : Offshore outsourcing Choose which function to be outsourced: BPO Non-core competencies Select outsourcing service providers -Country -Company

16. Language- Is English an official language there or at least is widely spoken in that country?

17. Talent pool- Is there a well-establish education system which provides a sufficient supply of qualified labor?

18. Cultural compatibility –Is the culture open enough and fits American/western culture?

19. Employment-related regulation- Is the regulation strict?

21. Intangible resources (e.g. talent, human resource)Have relevant experience in providing the required services

23. Have financial strength to take the engagement and compliance to requirements

25. 19 Outsourcing considerations: Why India? Mature Outsourcing Market

26. 20 Outsourcing considerations: Cost

27. 21 Outsourcing considerations: Scale & Quality of the workforce

28. 22 Outsourcing considerations: Infrastructure

29. 23 Outsourcing considerations: Risk Profile & Law and Policies India counts 0.48% ranked 23rdfor the vulnerability of security attack while China ranks second at 12%. The penalties for defiance of laws are high. Legal contracts are based on- buyer country, seller country and international legal systems. Everyone tries to minimize uncertainty & reduce transaction costs. Lack of confidence makes it difficult for contract setting up.

30. 24 Outsourcing considerations: Opportunities for banking industries

31. 25 Outsourcing considerations: Why TCS?

32. 26 Outsourcing considerations TCS: Size, Financial strength A part of the Tata Group India’s largest industrial conglomerate, TCS has over 116,000 of the world's best trained IT consultants in 50 countries. Financial strength to take the engagement and compliance to requirements The company generated consolidated revenues of US $5.7 billion for fiscal year ended 31 March 2008

33. 27 Outsourcing considerations TCS: Relevant experience Involved in Banking and Financial Services BPO for three decades. Worked with leading banks and financial institutions like Deutche Bank, Royal Scotland Bank, HSBC Bank, etc. Ability to fulfill detailed business requirements of Citigroup in terms of its physical assets (e.g. robust IT infrastructure ) and human resources (e.g. talents pool)

34. 28 Outsourcing considerations TCS:Company Fame

35. TCS had much of what Master calls ‘the soft infrastructure’ in place—English capabilities, a cultural and business affinity with its Western customers, rule of law,” 29

36. 30 Risk involved

39. Implement multiple checks & balancesEnsure the contract including Exit Strategy (end-to-end process)

40. 33 Comparison betweenexpectation & real situation

41. Expected sourcing strategies for Citigroup I 34

42. Expected sourcing strategies for Citigroup II 35

43. Real situation between Citigroup & TCS 36

45. Able to maintain long-term relationship with its outsourcer

46. Able to rely on a single vendor: TCS

48. Competitive Edge brought 39

49. Summary of Citi’s outsourcing strategy 40

50. Citigroup’s vendor management 41

51. 42 Recommendation

52. Recommendation 43 Cost is not the only factor to be considered when outsourcing Contract should include the ability to shift the focus towards enhancement and innovation Buyer organizations should use a structured, strategic approach to calculate the true costs of outsourcing They should include favorable transition clauses in the contract Should have vendor management measures

53. 44 Conclusion

54. Conclusion 45 There are internal and external reasons in outsourcing A few factors are needed to be considered while considering outsource A risk is always involved in outsourcing so a control mechanism is needed When doing outsourcing right, it could bring business values to the company

55. 46