Citigroup to trim IT costs.
By siliconindia   |   Tuesday, 26 May 2009, 22:57 IST
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Citigroup to trim IT costs.
Bangalore: Citigroup is geared up to cut down IT costs. A source closed to the company said that it will cut down on the application, maintenance and development (AMD) costs in order to integrate thousands of systems in the company. The integration procedure can bring in good business contracts for Indian IT firms such as TCS, Wipro and Infosys. It is because of the fact that the bank is keen to outsource the process to save costs. Although this process would bring in new business contracts, the existing AMD and IT services could witness a drop by up to 15 to 20 percent in budgets over the next six to eight months. Considering the Citigroup bank as a top client, TCS has accounted for 4.7 percent of its revenues in fiscal 2008-2009 which has dropped by 1.5 percent since the first quarter. A spokesperson of TCS, however, refused to comment on the matter. But, a spokesperson from Wipro said, "We do not comment on speculative reports and we continue to partner with Citigroup in increasing diverse initiatives to improve the efficiency of their IT systems and operations." Holding on to a similar point of view, Infosys CFO V.Balakrishnan said that the bank's decision to cut down their IT spends would create more outsourcing opportunities for them. The Citigroup is planning to cut down the number of data centres from seven to four. While Singapore is the only data centre for APAC region, the two India-based data centres were integrated with it, and Citi wants to have only one data centre in Europe and two in the U.S. Integrating the bank's systems and centralising the data centres would help Citigroup save at least 30 percent of its IT operating expenses. "The bank has been selling off its non-core assets, which has also helped in saving IT costs. The integration process will help them cut down their maintenance, operating and hardware costs by 30-50 percent," said Bob McDowall, Research Director of TowerGroup .

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