Not Just Another                     Round of Cost-Cutting:                     Why the Financial Services                ...
Why mere cost-         cutting wont’ cut it                  anymore     It happens all the time: the markets       are do...
The new reality    The industry must change its mind set towards short    term cost cuts. There are forces at play that ma...
Look for inspiration to the manufacturing industry    • The financial services industry must create permanent efficiencies...
Leveraging manufacturing concepts in     Service Delivery Operations    Manufacturers have been managing productivity with...
Units of work and distinguishable knowledge steps     in the process    Process Disaggregation                    Breaking...
Cost trending only provides part of the picture;     Do not target improvementsUnit of Work Analysis                      ...
Getting a clearer picture                • Delve into what’s driving your costs, why your costs have                  incr...
Points to bear in mind    Before you start tweaking your processes, here are some     questions to ask:    • What processe...
Conclusion     • Once you have gone through this process you should have a       clear picture of how your organization fu...
For more details please visit the link below:        http://www.wipro.com/Documents/resource-          center/CostCutting_...
About Wipro Consulting Services      Wipro Consulting Services helps companies solve todays business issues while      thi...
Thank You                       ©Wipro Limited, 2012. All rights reserved.                       For more information visi...
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Wipro Cost Cutting Presentation

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Why mere cost-cutting won`t cut it anymore
It happens all the time: the markets are down, profits are falling, and a major financial institution announces cost cuts and lay-offs.

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Wipro Cost Cutting Presentation

  1. 1. Not Just Another Round of Cost-Cutting: Why the Financial Services Industry Needs to Create Permanent Operating Efficiencies1 © 2012 WIPRO LTD | WWW.WIPRO.COM
  2. 2. Why mere cost- cutting wont’ cut it anymore It happens all the time: the markets are down, profits are falling, and a major financial institution announces cost cuts and lay-offs. While the stock market may rejoice, such cuts simply return a bank to its status quo; and as the market or the economy rebounds, staff levels inch up and the banks cost basis returns to previous levels.2 © 2012 WIPRO LTD | WWW.WIPRO.COM
  3. 3. The new reality The industry must change its mind set towards short term cost cuts. There are forces at play that make a change in the industrys mindset an imperative: The growing Innovation in The financial burden of financial Scale is no services meeting services is longer a industry is regulatory running low, major factor becoming requirements, drying up in competition increasingly adding to revenue commoditized expenses streams3 © 2012 WIPRO LTD | WWW.WIPRO.COM
  4. 4. Look for inspiration to the manufacturing industry • The financial services industry must create permanent efficiencies by reducing processing costs and increasing productivity in delivering services. • In manufacturing, knowing the "cost per unit" is part of the industrys DNA. • By understanding the cost of each element of the production process, a manufacturer can tinker with the components of his supply chain and use alternative delivery approaches to drive efficiency and productivity • Similarly, financial services executives must try to achieve the same long-term productivity improvements and cost efficiencies as manufacturers by looking at their processes as a series of supply chains—that is, by focusing on the microeconomics.4 © 2012 WIPRO LTD | WWW.WIPRO.COM
  5. 5. Leveraging manufacturing concepts in Service Delivery Operations Manufacturers have been managing productivity with Cost of Goods •Processes are easily replicable, so they must constantly improve efficiency •Statistical techniques exist to assess productivity •Process inputs are discrete, and end-user consumption is objective Traditionally, the service industry has largely ignored such practices •More expensive "knowledge workers" are often considered irreplaceable, e.g. bankers •Intimate customer interactions open providers to subjective notions of quality •"Invisible" inputs and outputs can lead to defense of the status quo However, service managers can adopt certain concepts to improve performance •Unit Cost •"Factors of Production" •Cost of Service Delivery Hyper focus on "Cost of Trade" support similar approach...75 © 2012 WIPRO LTD | WWW.WIPRO.COM
  6. 6. Units of work and distinguishable knowledge steps in the process Process Disaggregation Breaking down process steps helps identify "Units of Work": Cash Unit of Work: Level Customer Trade Corporate Processing Income Corporate Actions 1: Service Processing Actions Capture Data Clearing & Unit of Work: Level 2: Validate Scrubbing & Notification Settlement Data Scrubbing Enrichment Level Compile Vendor & Create New Asset Monitor/Escalate Communicate Research & Unit of Work: Data Critical Complex Booking Resolve Custodian Data ID 3: Actions Decisions Exceptions Processing Knowledge Step # of transactions # of transactions processed processed STP Output Step vs. Manual "Units of Work" Knowledge-based End-to-end provide insight into steps that require process view of how an operation is expertise can raise INSIGHTS: costs allows you to resourced and the cost of the identify which made more overall process, process steps are productive for given and inhibit most resistant to transaction productivity. cost programs. volumes.76 © 2012 WIPRO LTD | WWW.WIPRO.COM
  7. 7. Cost trending only provides part of the picture; Do not target improvementsUnit of Work Analysis In order to answer the “#L2 Recons” question, multiple data Observation Increased Total Unit Cost sets are required: (Labor) Available? Data set Cost Process Labor $ #L2 Recons #Trade Analysis Labor Hours Labor Hours #L2 recons Needed Total FTEs in group Yes No Current efforts for time period Yes Yes #Reconciliations, by type Yes Yes Has the Have Have fewer Possible cost of workers exceptions Reconciliation time No Yes Causes labor become been parameters increased? less generated? Reconciliation frequency No No productive? Understanding the microeconomics at the process level can clarify productivity alternatives7 © 2012 WIPRO LTD | WWW.WIPRO.COM
  8. 8. Getting a clearer picture • Delve into what’s driving your costs, why your costs have increased over time, especially relative to underlying transaction volumes The big • This will help to identify trends and pinpoint causes picture • Start establishing unit of work metrics for each of your major processes and their components Unit work • Distinguish between pure knowledge steps, such as assessing risk, and output steps, such as validating customer information metrics • At this point, some clear areas for change should become apparent Areas for • Tweak your processes to create and manage process efficiencies change8 © 2012 WIPRO LTD | WWW.WIPRO.COM
  9. 9. Points to bear in mind Before you start tweaking your processes, here are some questions to ask: • What processes are the major drivers of cost and productivity? • Is the size of your operation appropriate for the transaction volume and service delivery processes? • Are expensive specialized knowledge-based processes distinguishable from inexpensive output-based processes? • Where has the unit cost increased or productivity decreased in the existing processes? • Where have resources been increased in the processes? • Have labor and non-labor costs increased? Have workers gotten less productive?9 © 2012 WIPRO LTD | WWW.WIPRO.COM
  10. 10. Conclusion • Once you have gone through this process you should have a clear picture of how your organization functions—the costs, the strengths, the deficits. • You have essentially diagrammed your organizational supply chain—and with that knowledge you can make educated decisions on how to create and manage process efficiencies that will endure over time, regardless of market swings.10 © 2012 WIPRO LTD | WWW.WIPRO.COM
  11. 11. For more details please visit the link below: http://www.wipro.com/Documents/resource- center/CostCutting_Final-May-2012.pdf11 © 2012 WIPRO LTD | WWW.WIPRO.COM
  12. 12. About Wipro Consulting Services Wipro Consulting Services helps companies solve todays business issues while thinking ahead to future challenges and opportunities. As a business unit of Wipro Technologies, one of the worlds leading providers of integrated consulting, technology and outsourcing solutions, we bring value to our clients through end- to-end business transformation – think, build and operate. Our model for the includes implementing lean process transformation, exploiting new technology, optimizing human capital and physical assets and structuring next generation partnering agreements that create value and win/win business outcomes for our clients. For more information, visit www.wipro.com/consulting or contact us by email at wcs.info@wipro.com12 © 2012 WIPRO LTD | WWW.WIPRO.COM
  13. 13. Thank You ©Wipro Limited, 2012. All rights reserved. For more information visit www.wipro.com No part of this document may be reproduced in whole or in part without the written permission of the authors. Wipro is not liable for any business outcome based on the views presented in this document. For specific implementation clients should take advise from their client engagement manager.13 © 2012 WIPRO LTD | WWW.WIPRO.COM

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