Throughout this blog series, we have seen that change needs to come to the methods by which financial institutions can commission and support transformational projects.
changeSourcing plots a course between the high and fixed overheads associated with captive resource and the potential for disruption and risk that can come with outsourcing. But the question will remain in many CIOs’ minds: exactly how can I retain my previous resource and put my change capability on an advantageous new footing?
To answer this question meaningfully, it is crucial to bear in mind at all times some of the fundamentals of the changeSourcing model. Perhaps the most important of these is the concept of the balance that is achieved between the financial institution and the changeSourcing provider.
Together, the provider and the institution work out a detailed profile for the roles and skills that will be required to maintain the change project delivery function, once the captive resource has transitioned to the service provider. On transition, the service provider looks to build a fully fungible resource. Here, the balance is between continuity and flexibility.
So, some individuals, especially senior management, will likely continue in their previous roles for a minimum defined time period. Others may move to different roles within the service provider. And some functionality may be provided – if fully appropriate and agreed by both parties – through offshoring. From the financial institution’s perspective, however, the fundamental advantage is that improved levels of service flexibility are guaranteed, and at rates that compare very favorably indeed with captive resource.
This advantage is achieved through leveraging the difference in cost structures between institution and service provider. Typically, the service provider can employ the change skills base on a much lower cost base. So, previous employees’ time can be charged to the institution at consulting rates; rates that reflect a much lower overhead.
This favorable balance is strengthened further by fully outsourcing appropriate tasks, again, at much lower rates than could be achieved with captive resource. Finally, the service provider is able to, over time, utilize some of the institution’s previously captive resource in the context of other consulting work, thereby generating revenue. But, at all times, the fully fungible resources needed to implement agreed transformational change projects will remain in place and available, flexibly and cost-effectively. There is no fall-off in the “expertise equity” built through the institution’s investment in their previously captive resource.
It’s this balance of interests that makes changeSourcing a true win-win situation.
This is the fifth in a series of blogs that explores change management. Next week, I will be wrapping up the series and answer the four most frequently asked questions about changeSourcing.
Mark Reeves is the Global Capital Markets leader and the Co-Leader of the Capital Markets group based in Capco's New York headquarters. He focuses on both integration and efficiency-enhancement initiatives and technologies, leading to significant cost savings and profit increases.
The content and opinions posted on this blog and any corresponding comments are the personal opinions of the original authors, not those of Capco or FIS.