Australia and New Zealand Banking Group chief executive Mike Smith said today he'd look to harbour more of its operations offshore in the future as he also discussed details of the bank's beefed up technology spend.
Smith guessed today at the bank's annual results briefing for the year to 30 September 2009 that the bank had 4000 employees already in Bangalore, India — 500 more than the latest released figure. Despite India's recent wage hikes, he said it was still cheaper to source employees than Australia.
The bank has been slowly increasing the number of its technology workers in Bangalore over the last years. It announced in March that the number was increasing from 3000 to 3500 as it cut staff at its Melbourne headquarters. However, it also recognised the difficulties it was causing staff who were made redundant during economically difficult times and introduced a $10 million package to help those workers who had lost their jobs. Yet the jobs migration isn't over, Smith said today.
"We have migrated a number of operational areas to [Bangalore]," he said. "From Australia, from NZ and indeed from the Asia Pacific, and as we build up the Asia Pacific businesses we'll be looking, of course, to put more of the business there."
He said that he wanted to create centres of excellence around the world and that he didn't care where they were. "I think what is important is that we actually create a proper strategy around our back office operational centres and indeed our IT development shops which at the moment are still a bit fragmented."
As it forms its strategy for centres of excellence, the bank has also been tipping money into the technology pot. It has increased its technology spend by $157 million, or 26 per cent. This amount has gone to buying software for $50 million, higher amortisation of $31 million, an increase in the software it writes off to $24 million, a $15 million increase on the money spent on computer contractors, an $11 million jump in the cost of rentals and repairs, an $8 million spike in data communications and a $23 million hike in "other computer costs", which includes super regionally network costs.
ANZ has also spent $218 million on process engineering within Operations Technology and Shared Services, writing off ATMs in its network upgrade and transforming its NZ business. According to its annual report, $100 million in benefits had flowed through to the bank from these transformations.
"I think that that will cover a multitude of areas," Smith explained at a briefing after his results presentation.
One such was an upgrade to the bank's PeopleSoft general ledger and HR system as well as its Hyperion financials. "We're actually spending quite a bit of money on upgrading and in fact stabilising some of those systems which I think have probably lacked a bit of investment for the last few years," Smith said.
"There's quite a bit of work being done on the enterprise platforms for HR and finance and risk to create a more robust platform so that the group can grow," CFO Peter Marriott added. "Something that is scalable and can be rolled out to any new acquisitions very easily."
Smith said more of the technology funds were going to rolling out Infosys' Finacle in the Asia Pacific region. Finacle went live in Laos in early June 2008 and then in Indonesia in November 2008. China is next on the cards, then Singapore.
Institutional Banking's technology had also been revamped, Smith said. "We've spent a fair amount of money on fixing some of the institutional banking systems which did require a fair amount of remedial work."
Additionally, the bank had spent money upgrading its internet platform, Smith said, and integrating systems technology in New Zealand.