Standard Chartered takes global delivery network to next level

Standard Chartered bank will spend $3bn on its global delivery centres over the next three years to support its digital transformation.

This includes $30m to be spent on its technology and operations centre in Malaysia.

The bank set up delivery operations in Malaysia 15 years ago, so it can scale up rather than start from scratch.

Matthew Norris, CEO at the Malaysian hub – known as Scope International – said the bank would continue to invest in the centre, which provides technology, software and system development, and IT technology support services.

Standard Chartered also has an IT delivery centre in India.

Peter Schumacher, CEO at management consultancy The Value Leadership Group, said Standard Chartered was a pioneer in setting up global delivery centres. “Starting in 2001, it was one of the first banks to develop an integrated network of shared services centres in Asia,” he said.

The bank is now scaling up its global delivery network, said Schumacher. “Like many banks, it is stepping up its cost focus to improve profitability. Enhancing its already large centre in Malaysia will help it structurally lower its cost base and increase its development capabilities in newer digital technologies.”

But it is not just about lowering costs, he added. “It shifted its attention from cost to skills, built domain capabilities, redesigned global processes and worked on global integration.”

India remains the favoured location for businesses’ global delivery centres, but Malaysia is becoming increasingly popular. According to AT Kearney’s Global Services Location Index, Malaysia ranked third behind India and China as the preferred global location.

Malaysia’s fellow members of the Association of South-East Asian Nations, Indonesia, Thailand and the Philippines, also featured in AT Kearney’s top 10.

Schumacher said Standard Chartered is committed to in-house IT development and operations and outsources very little to service providers.

Companies such as AstraZeneca are increasingly moving away from a heavy reliance on offshore service providers and are investing in their own offshore operations. AstraZeneca said it planned to reduce its outsourced IT from 70% to just 30%

Meanwhile, German car manufacturer Daimler said it planned to save €150m a year by bringing IT services in-house and expanding its IT operations in India and Turkey. And in 2012, General Motors said it planned to insource about 90% of its heavily outsourced IT operations.