Reducing a large investment banking company’s dependency on contract staff and cutting its costs by $7.5 million over five years
When a large investment bank recruited a new application support services manager, his initial analysis of the business found that costs were spiralling year on year.
There were also signs of growing frustration and concerns over service delivery from the internal customer base. An accurate assessment was necessary upon which to base any decisions that were intended to fundamentally affect the future of the company’s support services and how these services would be delivered. Since the client’s overall business was good, any change in the way services were provided needed to be managed, to reduce risk and avoid any negative impact from the change.
Approach
Quanta was invited in to review the issues and, as part of its initial analysis, found that the company’s high dependency on contract staff gave the business a high exposure – should those staff decide to leave early. This fundamentally steered the manner in which the assignment was undertaken.
Process
- Reviewed background/drivers with client
- Understood who were the ‘interested parties’
- Achieved clarity of objectives
- Created a TOR and deliverables
- Qualified the identified risk areas
- Consistent approach given to functional investigation of each team area (including: operational relationship/interface with other functional areas; team structure, roles and responsibilities; internal customer relationships; performance metrics)
- Operating budget assessment
- Impact assessment performed to identify the basis for a ‘contractor rationalisation plan’
Outcome
- Identified four interrelated benefit areas:
- Process efficiency
- Staff management and role realignment
- Cost tracking and management
- Measures to manage business risk
- Achieved assignment objectives
- Cost reduction from: contractor rationalisation/staff realignment; productivity gains/reduced downtime; cost tracking/improved budget methods; preparation of a time-based programme
- Break-even forecast at year one
- Staffing reduced by 10 in first year
- From the end of year one, contract staffing was at 25% of permanent (was 28 internal/38 external)
- Cumulative year-5 savings estimated $7.5 million
The client was overjoyed with the results delivered by Quanta on this business-critical assignment. The success of this programme depended on both parties – and Quanta had been prepared to negotiate commercial terms that were principally on a ‘risk and reward’ basis.