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
"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
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
Additionally, the bank had spent money upgrading its internet platform, Smith said, and integrating systems technology in New Zealand.