Outsourcing Excellence Award – Best Financial Services – Royal Bank of Canada and iGate Global Solutions
Whether it is a family seeking its first mortgage, a small business owner looking to expand, or a multinational corporation exporting to new markets, Royal Bank of Canada (RBC) is continually seeking ways to better understand its clients’ aspirations and goals.
RBC, based in Toronto, is Canada’s largest bank as measured by assets and market capital and one of North America’s leading diversified financial services companies. To keep up, it has to offer competitive new products and services. “It’s all about a relentless focus on communicating and building relationships based on trust, insight, and time to market to deliver value to the people we serve,” says Marjorie Mong, vice president, head of Application Services at RBC. The bank decided to offshore some of its IT development work to strengthen its offerings.
“Prior to this relationship, a few areas of RBC dabbled in offshoring and outsourcing,” says Mong. But no one shared the learnings across the enterprise because each department launched offshoring efforts on its own. No one coordinated governance or infrastructure. “As a result, we got mixed results and quality,” she continues.
Over the years, RBC has made dramatic operational changes to make it easier for clients and business partners to do business. With objectives of revenue generation and cost savings in a fiercely competitive business, RBC recognized its application development capabilities in 2005 needed to grow quickly to support business demands. It created a Global Resource Center “to pull together key offshoring learnings,” explains Tim Folkins, head of the new center.
“We saw a lot of work coming down the pike. We had many more projects than people to meet the growing demands of our internal business partners. Therefore, we had to find another way to augment our application development resources ? and offshoring was the answer,” says Folkins.
Today iGATE has over 500 people working on RBC projects.
RBC first looked at large offshore suppliers and visited their facilities in India. “Those visits made us realize we needed to look at a mid-size supplier to influence and shape the direction and create opportunities for joint collaboration,” says Mong.
The bank looked at several suppliers and short-listed the selection to three. RBC executives flew to India to inspect campuses in Delhi and Bangalore. “Our management team narrowed down the choice to iGATE fairly quickly,” says Folkins.
He says iGATE not only hosted RBC executives at its facility but also took them to other facilities to talk to peers about sending work to India. They also visited the campuses of Indian universities producing the next generation of IT talent.
“Our vision and strategy — integration of technology and operations (ITOPS) — fit well with the RBC’s realignment,” says Swamynathan Ramchandran, iGATE’s business group manager for Canada.
If the RBC application development team thought setting up offshore centers was hard, getting their colleagues to send their IT development projects there was harder. Folkins says iGATE “invested in a large onsite team to work with RBC.”
To encourage offshoring, the partners created an iGATE/India awareness program. The bank’s offshore management team took multiple trips to India during the relationship’s first 18 months. “This strengthened the partnership. It also helped RBC management understand how it could leverage this offshore relationship,” says Folkins.
To insure success out of the gate, he says iGATE “provided us with topnotch people to work with us from the very first project.” The initial project had an aggressive timeline and required “quality we could not compromise.” Folkins says at first RBC employees “were a bit anxious about the quality of work they would see. “Our people discovered they could call iGATE at any time to discuss issues; they were responsive and made changes quickly,” he reports.
iGATE brought its delivery managers to Toronto; it hosted a two-day workshop “to socialize the team,” says Jason Trussell, vice president and regional manager responsible for iGATE’s buyers in Canada.
“While most RBC IT staff supported the offshoring initiative from day one, some employees expressed some valid concerns,” says Mong. The bank’s response: “We implemented a full-scale internal communication awareness program to educate our employees about the benefits of offshoring application development work.”
At the end of the day, “the key message to everyone was that offshoring was not about job cuts. It was about augmenting our workforce in a flexible way,” says Mong. “Together we presented a consistent message that iGATE was there to help us address gaps and meet the increased demand from our internal business partners. We explained that we wanted to build a partnership with iGATE that was more like an extension of RBC’s IT organization.”
How offshoring works
Trussell says RBC’s IT department “had to get used to not having its teams co-located.” Then there was “the added dynamics of working with a different culture. We had to get the bank’s employees to get their minds around the fact we were going to do things differently.”
Trussell says creating the Global Resource Center helped because there was a single point of communication. “Bank employees knew where to go to set up offshoring,” he explains.
The time difference is 9.5 or 10.5 hours, depending on the season. “This can create difficulties,” Trussell continues. He says iGATE works late so the business days of the two partners match up.
Another challenge: India’s telephony. “Speaker phones that are four-bit mono don’t always translate the subtleties of a conversation,” Folkins continues. Now the partners like to use RBC’s internal instant messenger and video conferences to build effective communication.
The final challenge was the Indian penchant for not wanting to disappoint. “In our culture, we bring an issue to the fore so we can talk about it and deal with it. We like timely escalation. But Indians don’t want to escalate because they want to work on the issue first,” he explains.
RBC got around this cultural trait by having biweekly meetings for all projects. Folkins says he opens the meetings by saying, “This is a conflict-free session to bring up challenges and to identify solutions.” He says iGATE now realizes that “escalating isn’t the end of the world. We want to deal with issues as they arise versus going into crisis mode.”
The pillars of offshoring success
Trussell says iGATE coordinated “India 101 trips” for RBC management teams visiting the iGATE facilities in India. “They come to work on a specific project or to understand the dynamics of how the RBC’s offshoring program works.”
Trussell says Westerners have a preconceived notion that Indians can only do development. They go home with an appreciation of India as a place for IT services. It opens their eyes to what’s really possible,” he says.
He laughs when he says many visitors “are surprised our campuses are nicer than their offices.” In the end, he says the trips “break down cultural barriers.”
When RBC offshores a complex project “we send key individuals to India to work directly with the iGATE teams,” says Mong.
In the beginning, RBC expected that it could “just hand over the application development work and it would come back with minimal errors.” She says “the big learning” was the bank had to “continually communicate” with its offshore supplier. She says things got better with each successive project because RBC and iGATE integrated key learnings from each experience.
At the end of a project, RBC employs a feedback loop. It sends everyone on the project a survey asking what we can do better. “That’s how we amassed our learnings,” Mong says. iGATE also sends its staff to Toronto “to cross-pollinate their onsite team.”
Originally the contract was only for applications development and reengineering. Early on, RBC added maintenance of the older technology “to free up the bank’s subject matter experts to work on more strategic initiatives,” reports Trussell.
RBC is pleased with iGATE’s attrition rate. “Our attrition rate for iGATE resources working on the RBC account is lower than iGATE’s corporate attrition rate. And it’s lower than the standard rate for India,” Mong continues.
Originally, RBC viewed iGATE “as an added resource,” says Mong. Now the bank is pushing iGATE “to go out and earn the business from project managers.” The supplier has set up delivery managers for every RBC executive platform “to establish a relationship and get more business.”
Why this relationship works
Both partners are working toward the same goals. “iGATE tied its senior executive results to ours,” says Mong. “This helps to ensure that we’re both working towards the same set of goals.” Adds Trussell, “Our team’s incentive is to make sure RBC meets its goals. When they win, we win.”
“I’m aligned at the hip with their Global Resource Center,” Trussell says. “Senior leaders give this relationship their top attention.”
The partners took a metric-driven approach. The teams created a balanced scorecard. “We created a dashboard to measure the success of the relationship for our executive committee at RBC and iGATE,” says Mong.
“They pay close attention to us. They are responsive. That has paid dividends,” says Mong. “Jason is a constant fixture around here,” she notes. “His presence has gone a long way to help make this a real partnership.” Mong says she’s worked with the bigger suppliers in the past who have “account managers who come and visit you now and then.”
iGATE has continually adapted and expanded its onsite team as the projects grew. On day one iGATE sent three people to work at RBC. Today that number is nine. “We like the fact they are available at a moment’s notice. We are impressed with their proactive hands-on approach and attention to detail,” says Mong.
Being onsite also helps when issues arise. “We discuss the problem, fix it, move on, and then make sure it doesn’t happen again on future project,” says Trussell. “We never point fingers.”
It also makes it easier for iGATE to see new opportunities. “They see we’re working on something; they provide insight. They are aware of our key initiatives. They know what we are trying to achieve, so they understand what we need them to concentrate on,” says Folkins.
Mong says RBC knows “there are always two key reasons why application development work experiences problems: Requirements and expectations are not clear up front; and the parties underestimate time/resources. Both issues led to delays or cost overruns.”
There’s trust. Trussell says “they know we are working on their problems. They presume we are handling things.”
Folkins says it takes 10 days to get a new employee up and running at the bank. “iGATE can onboard its resources faster, and they have access to a wide range of specialized skills,” says Folkins.
To date, RBC has significantly exceeded its cost saving targets since it signed a contract with iGATE. Folkins says RBC “couldn’t do the volume we do without outsourcing. It’s what we have to do to make sure we complete our projects to meet the bank’s business demands.”
Trussell points out that RBC’s offshore projects have increased tenfold since signing a contract with iGATE. “Originally we worked on offshoring projects for two groups in RBC applications. Today every department in the group sends us work,” he reports.
For the first time, RBC has a true follow-the-sun team. “We get more work done because our offshore team is working while we finish our business day,” says Mong.
The partners have adopted “a disciplined approach” to quality assurance (QA). “We’re looking to iGATE to look for innovative ideas on QA. They have offered good feedback on how to streamline our internal processes,” Mong continues.
“Our vision has led us to create a best-in-class offshoring partnership with iGATE, which will continue to help us to support the future growth of our internal business partners,” Folkins concludes.
Lessons from the Outsourcing Journal:
- Cross-pollinating offshore/onsite teams improves application development work.
- Communications plays a critical role to building an effective and efficient offshore initiative.
- Make requirements and expectations extremely clear up front.
- Don’t underestimate the time/resources need to build collaboration.
- Cultural differences are important to learn and understand.
- Incorporate learnings as you go to improve performance.
- Leverage time zone differences to your benefit.