UBS employs thousands of staff in India to provide mostly IT and other back-office services. But the trend towards an outsourcing of services may have been broken.

More efficiency, lower costs and more flexibility – the mantra of the financial service industry fostered the outsourcing of activities in the past. In India, IT service centers mushroomed and local firms such as Wipro, Tata and Cognizant made deals with the big banks to provide back-office services at much cheaper rates than the banks could possibly achieve themselves.

UBS was one of the companies to follow the trend and launched its UBS India Service Center in Hyderabad. In 2009, the bank sold the center with 2,000 members of staff to Cognizant and agreed a five-year service deal with the firm to the tune of $450 million.

When the deal ran out, the two companies remained in business and the «Times of India» estimated that UBS paid $120 million to Cognizant each year for services provided by some 2,500 members of staff.

Rebuilding Own Centers

The newspaper now reported that only a fifth of the original workforce is left and that the deal between the two companies has been trimmed accordingly.

UBS reduced the amount of work processed at other companies and rebuilt its own resources. UBS developed business solution centers in Hyderabad, Mumbai and Pune with the aim to keep 60 percent of services in house, up from as much as 70 percent outsourced.

The main reason cited for this retro trend is the speed of digitization in financial services. Classic providers of IT services such as Wipro and Cognizant are struggling to keep up with this speed.

From Singapore to India

UBS told the «Times of India» that the optimization of how much worked was given to third party providers was a constant. Cognizant didn’t comment.

The launch of the Pune Business Process Outsourcing Center meant that the bank moved jobs from Singapore to India, which mainly affected Indian workers with a permit for Singapore.

UBS still maintains a large number of BPO activities in India (as well as in Poland), because it has a direct access to a huge IT talent pool. Still, the bank also decided to build a number of new service centers in Switzerland. The uniform booking platform for wealth management increased the need for IT in Switzerland significantly.