BFSI: Maintaining Fiscal Health

Even this year, it was mostly the banks and insurance companies
amongst Indian enterprises that rode high on the IT maturity curve; in many of
them, IT adoption was in fairly mature stages. No wonder, therefore that these
banks comprised the heaviest IT spenders among Indian organizations.

Total IT outsourcing has been the most prominent trend that
marked the IT maturity of the BFSI sector. The Bank of India contract with HP
was the pioneer, and Bank of Baroda and UCO Bank have replicated this model
among others with HP only. While the hardware deployment and networking part as
well as application rollouts were more or less complete, more of the consulting
phenomenon is now coming into the forefront of these engagements.

Total IT outsourcing has been the most prominent trend that marked the IT maturity of the BFSI sector

Adopting a Change

Bank of Baroda looked at adopting a change management approach, whereby HP
consulted with them to create a model branch. HDFC Bank inked a 10-year Rs 360
crore contract with Wipro Infotech for IT outsourcing that involved provisioning
of IT infrastructure for branches, infrastructure management for datacenter,
networking, end user support and level 1 application support. Under a five-year
contract, HP would implement and manage the core banking solution (from Infosys)
across 1,000 branches of UCO Bank.

Linux, a Tool

BFSI has also emerged as a powerful Linux votary. The UTI Bank call center that
handled over 7,000 calls per day was running on Linux. Canara Bank and Central
Bank also deployed Linux in over 2,000 branches while Allahabad Bank did so in
800 branches. On the insurance side, Life Insurance of India (LIC) planned Linux
deployment across 30,000 desktops, New India Assurance scaled up to 23,000 and
so did Bajaj Allianz.

Basel II compliance is another crucial issue debated in the
Indian banking sector. As the deadline to start implementing Basel II inched
closer, Indian banks needed to get their act together and step up their efforts
to become Basel II ready. Basel II accord lays increased emphasis on regulation
and risk management.

Emerging Area

Domestic BPO was another emerging area that witnessed increasing traction
amongst BFSI organizations. On this front, SBI outsourced its customer support
operations to MphasiS for about Rs 250 crore. Under the deal, MphasiS provides
predominantly voice-based inbound services for the bank from its Noida center.
India's no. 2 bank, ICICI was running two large call centers in Mumbai and
Hyderabad set up at Rs 20 crore and Rs 50 crore, respectively. While the Mumbai
center had 700 seats, Hyderabad had 1,200. HDFC Bank, one of the first banks in
the country to launch call centers, serviced 80% of its customers through 13
centers located across the country during 2005-06.

Syndicate Bank became the first public sector bank to enter the
BPO segment when the Reserve Bank of India cleared its proposal to float a new
subsidiary for undertaking BPO activities with an authorized capital of Rs 10
crore and subscribed capital of Rs 1 crore. Eventually, this entity would also
cater to the back office needs of other banks, mutual funds and RRBs. Bank of
India also started a business process re-engineering (BPR) exercise,
encompassing centralization of operations not requiring customer interface as
well as restructuring of the organization in view of changing business
requirements.

Rajneesh De

rajneeshd@cybermedia.co.in