Die Welt reports today that up to 5500 positions in the Global Technology and Operations (GTO) organisation of the Deutsche Bank could be outsourced or transferred to low-cost countries such as east European countries and India by the middle of 2005. GTO develops and supports over 2000 IT applications world wide.
This would represent around half of the 10800 employees in GTO world wide and in addition around 2000 contractors and employees of third party suppliers could affected. It is likely that many of those affected will be based in the IT organisation at Eschborn, near Frankfurt. Other high cost locations which will be affected include London and New York.
The bank recently outsourced 1000 positions in the area of computer center operations to IBM.
It will be interesting to see how this plays out over the years. I have worked in outsourcing projects for around 6 years on both sides of the fence and a project of this size will certainly be a challenge both parties.
A lot will depend on exactly what is outsourced and what is transferred to subsidiaries in cheap-labour countries - on the whole, highly standardised services such as computer-center and network management which don’t encompass areas of strategic customer know-how tend to be successful outsourcing projects. Activities such as business analysis and software development tend to be closely coupled to strategic business knowledge and even if the customer is initially satisfied with his outsourcing supplier, it is very difficult to transfer the skills and know-how back to the customer or to a different outsourcer if the customer changes his mind later.