Half the team at the heart of the RBS disaster WERE in India Cost-cutting RBS management had halved the team within which the banking group's recent data disaster happened, sources have told The Register. The sacked British employees were replaced by staff in India, and there had been concerns about the quality of the work done in India for a lengthy period prior to last week's …
Bang on, especially about the staff turnover. This is a hidden cost for the customer - I've been in the situation of being asked to update printed documentation, only to find when I asked for the original Word doc that it had been written by an offshore person, who had subsequently left the outsourcer, So the customer had to pay me to repeat the creation of the doc from scratch, as if none of the work they had paid for had ever been done.
Confronted with absolutely horrible first level response from our outsourced admins, a group of architects at my company traveled to India and created a "university" there, which was a training program specifically to provide incoming first level admins with enough expertise to provide what we (the customer) considered adequate support. The cost was justified to our own management as "teaching first responders our company culture and proper ways to communicate". -- where it was actually a series of bare bones technical administration courses tailored to the area of responsibility.
The program was very successful, but not in the manner intended. The locals flocked to those entry level positions, completed their training, and... quit to find better paying jobs. Given the opportunity to get paid while being trained for your next job, who wouldn't jump at that?
And so, on top of the outsourcing cost, we have the added cost of maintaining our "university" there, and we still get "support" which consists of responding "yes" to everything we say.
In the most recent employee satisfaction survey, outsourcing was the absolute top issue by a wide margin. Upper management passed this off as a perception issue. I guess in some Alice mirror world it could be. If you lower your expectations enough, anything you get could be called sufficient.
I think the following descriptions are quite apt in this context...
Groupthink is a psychological phenomenon that occurs within groups of people. It is the mode of thinking that happens when the desire for harmony in a decision-making group overrides a realistic appraisal of alternatives. Group members try to minimize conflict and reach a consensus decision without critical evaluation of alternative ideas or viewpoints. Antecedent factors such as group cohesiveness, structural faults, and situational context play into the likelihood of whether or not groupthink will impact the decision-making process.
The primary socially negative cost of groupthink is the loss of individual creativity, uniqueness, and independent thinking. As a social science model, groupthink has an extensive reach and influences literature in the fields of communication studies, political science, social psychology, management, organizational theory, and information technology.
http://en.wikipedia.org/wiki/Groupthink
Tacit knowledge (as opposed to formal or explicit knowledge) was first introduced into philosophy by Michael Polanyi in 1958. Tacit knowledge is defined as work related practical knowledge. It is that which is neither expressed nor declared openly but rather implied or simply understood and is often associated with intuition [1]. This kind of knowledge is difficult to transfer to another person by means of writing it down or verbalising it. For example, stating to someone that London is in the United Kingdom is a piece of explicit knowledge that can be written down, transmitted, and understood by a recipient. However, the ability to speak a language, use algebra,[2] or design and use complex equipment requires all sorts of knowledge that is not always known explicitly, even by expert practitioners, and which is difficult to explicitly transfer to users.
While tacit knowledge appears to be simple, it has far reaching consequences and is not widely understood.
http://en.wikipedia.org/wiki/Tacit_knowledge
I work for a traitor that offshores in India and in China.
I can only talk for India and the telco, i worked before. There are a lot of nice guys there.
But you can only say one thing concerning them. They are total assholes in this field. Whatever company you are talking accenture or others whatever.
Replacing one local guy with 3 indians which are cleaning their noses while being explained how works a solution during several video conferences was a total loose of time. Understood nothing about NT/Unix/DOS whatever.
Doing some PL/SQL dev and invoicing 5 days in Europe instead of 20 days in India was a fucking funny experience about cheap work.
Telling to some high cast in india that he is a politics/asshole was fun too.
But more fun is the client who is totally clueless and only sees the bill at the end of the month. "We Want 60% offshore....". Virtual factory. If only shit could be offshored.
So what now? Nuclear bombs on india? China? Could be nice.... But the culprits are not there they are here.
Companies ruined or almost ruined by imported Indian labor
Adaptec - Indian CEO Subramanian Sundaresh fired.
AIG (signed outsourcing deal in 2007 in Europe with Accenture Indian frauds, collapsed in 2009)
AirBus (Qantas plane plunged 650 feet injuring passengers when its computer system written by India disengaged the auto-pilot).
Apple - R&D CLOSED in India in 2006.
Apple - Indian national and former Goldman Sachs board member Rajat Gupta charged with leaking Intel and Apple secrets over the phone.
Australia's National Australia Bank (Outsourced jobs to India in 2007, nationwide ATM and account failure in late 2010).
Bell Labs (Arun Netravalli took over, closed, turned into a shopping mall)
Boeing Dreamliner ES software (written by HCL, banned by FAA)
Bristol-Myers-Squibb (Trade Secrets and documents stolen in U.S. by Indian national guest worker)
Caymas - Startup run by Indian CEO, French director of dev, Chinese tech lead. Closed after 5 years of sucking VC out of America.
Caterpillar misses earnings a mere 4 months after outsourcing to India, Inc.
Circuit City - Outsourced all IT to Indian-run IBM and went bankrupt shortly thereafter.
Cisco - destroyed by Indian labor, laid off 55,000 in 2012, going down the drain.
ComAir crew system run by 100% Indian IT workers caused the 12/25/05 U.S. airport shutdown when they used a short int instead of a long int
Computer Associates - Former CEO Sanjay Kumar, an Indian national, sentenced to 12 years in federal prison for accounting fraud.
Deloitte - 2010 - this Indian-packed consulting company is being sued under RICO fraud charges by Marin Country, California for a failed solution.
Dell - call center (closed in India)
Delta call centers (closed in India)
Duke University - Massive scientific fraud by Indian national Dr. Anil Potti discovered in 2012.
Enron, WorldCom, Qwest, and Tyco all hired large numbers of foreign workers from India before their scandals.
Fannie Mae - Hired large numbers of Indians, had to be bailed out. Indian logic bomb creator found guilty and sent to prison.
Goldman Sachs - Kunil Shah, VP & Managing Director - GS had to be bailed out by US taxpayers for $550 BILLION.
GM - Was booming in 2006, signed $300 million outsourcing deal with Wipro that same year, went bankrupt 3 years later
HP - Got out of the PC hardware business in 2011 and can't compete with Apple's tablets. HP was taken over by Indians and Chinese in 2001. So much for 'Asian' talent!
HSBC ATMs (software taken over by Indians, failed in 2006)
IBM bill collecting system for Austin, TX failed in 2012 written by Indians at IBM
Intel Whitefield processor project (cancelled, Indian staff canned)
Intel - Trade secret stolen by Indian national Biswamohan Pani in 2012.
JetStar Airways computer failure brings down Christchurch airport on 9/17/11. JetStar is owned by Quantas - which is know to have outsourced to India, Inc.
JP Morgan - Outsourced subsidiary & IT integration to India in 2009 for $400 million, lost $2 billion in 2012.
Kodak: Outsourced to India in 2006, filed for bankruptcy in Jan, 2012.
Lehman (Jasjit Bhattal ruined the company. Spectramind software bought by Wipro, ruined, trashed by Indian programmers)
Medicare - Defrauded by Indian national doctor Arun Sharma & wife in the U.S.
Microsoft - Employs over 35,000 H-1Bs. Stock used to be $100. Today it's lucky to be over $25. Not to mention that Vista thing.
MIPS - Taken over by Indian national Sandeep Vij in 2010, being sold off in 2012.
MIT Media Lab Asia (canceled)
MyNines - A startup founded and run by Indian national Apar Kothari went belly up after throwing millions of America's VC $ down the drain.
Nomura Securities - (In 2011 "struggling to compete on the world stage"). No wonder because Jasjit Bhattal formerly of failed Lehman ran it. See Lehman above.
PeopleSoft (Taken over by Indians in 2000, collapsed).
PepsiCo - Slides from #1 to #3 during Indian CEO Indra Nooyi' watch.
Polycom - Former senior executive Sunil Bhalla charged with insider trading.
Qantas - See AirBus above
Quark (Alukah Kamar CEO, fired, lost 60% of its customers to Adobe because Indian-written QuarkExpress 6 was a failure)
Reebok - Massive fraud and theft in India second in size only to Satyam fraud
Rolls Royce (Sent aircraft engine work to India in 2006, engines delayed for Boeing 787, and failed on at least 2 Quantas planes in 2010, cost Rolls $500m).
SAP - Same as Deloitte above in 2010.
Singapore airlines (IT functions taken over in 2009 by TCS, website trashed in August, 2011)
Skype (Madhu Yarlagadda fired)
State of Indiana $867 million FAILED IBM project, IBM being sued
State of Texas failed IBM project.
Sun Micro (Taken over by Indian and Chinese workers in 2001, collapsed, had to be sold off to Oracle).
UK's NHS outsourced numerous jobs including health records to India in mid-2000 resulting in $26 billion over budget.
Union Bank of California - Cancelled Finacle project run by India's InfoSys in 2011.
United - call center (closed in India)
US Navy F-18 jet crashes into Virginia apartment building on 4/6/12 after outsourcing F-18 work to India's Tata.
Victorian Order of Nurses, Canada (Payroll system screwed up by SAP/IBM in mid-2011)
Virgin Atlantic (software written in India caused cloud IT failure)
World Bank (Indian fraudsters BANNED for 3 years because they stole data).
I could post the whole list here but I don't want to crash any servers.
The issues related to outsourcing, and highlighted in this article, tend to be about communication and oversight — stemming from the physical distance between one set of staff and the other, and the way that decisions about how to distribute work are often money-oriented and made by people that can largely ignore the consequences.
Conversely, you seem just to dislike Indian people.
It's a nation with a population of 1.3bn so you'd expect a few bad eggs, and if everything else were equal you'd expect failed companies to be significantly more likely to have CEOs and other employees from India than from almost any other individual country. Similarly individual wrongdoers should be much more likely to be Indian, just like people who scratched their left ear yesterday are much more likely to be Indian.
What doesn't follow is that Indians are much more likely to be individual wrongdoers. To argue that is to fall for a trivial logical fallacy — a statement does not imply its inverse, e.g. "thieves are likely to earn less than £1m a year" does not mean that "those that earn less than £1m a year are likely to be thieves".
This post has been deleted by its author
No: the biggest issues related to outsourcing are dealing with the lack of real-world sysadmin or dev experience. Communication/oversight are indeed issues but it's the lack of experience that's the killer.
I used to work for a UK-based ISP and racked up six year's experience dealing with offshore teams in India. Every single one of them churned staff at dizzying rates of speed and after four years of banging our heads against a wall and getting absolutely nowhere, my peers and I petitioned our CTO to go to bat for us to the Board and bring the India-based techs over to the UK to work with us in the office and under close supervision. It worked a charm: just a few months after arriving the majority of them hit 5th gear and became damn good techies. Their experience started to rack up and - by the time I left two years later - they were pretty solid. Of course, it still sucks that the jobs were being sourced outside the UK, depriving any locals of employment, but - as the Indian techs were paid approximately one-third of what I'd have considered a decent UK rate - we could never get the bean counters to acquiese. We simply had to take what was on offer. The Board still saw their all-important cost savings and, after some intensive training and supervision, we got a team of very capable techies.
None of this is (or should be) a rant against Indians. If UK companies had all targeted China, South America or Eastern Europe 15 years ago for their outsourcing requirements, we'd be bitching about those people. Bottom line: it makes no difference what nationality, race, class, gender, creed, sexual orientation, etc. you're dealing with. If you're looking to cut costs and you have senior managers trying to ensure that they pay the lowest wages possible, you're going to end up entrusting your operations to people who have no business sitting behind a computer. Whether that person is sitting in Pune, Prague, Palm Springs, Panama City, Perth or Pyongyang is irrelevant.
I used to bank with The Woolwich until Barclays bought them out and then scrapped my debit card - when I went to reapply I was told my credit rating wasn't good enough (as I refused an overdraft facility). That meant while I was previously able to make online purchases with my Visa Electron card, the Barclays replacement Savings card was literally useless to me. Needless to say I will never go with Barclays ever again.
I then applied to Halifax, again turning down an overdraft facility - I was rejected. Finally I applied for a Natwest account and ticked the box for a £1400 overdraft facility and suddenly I was accepted with open arms. However, over the years I've been unimpressed. It started with an iPhone banking app being heavily hyped, yet with no Android equivalent in sight. It took years for them to finally support Android, despite it having a much larger user base - it was more important for them to be trendy that address the needs of their customers. Then recently I spoke to a financial adviser at Natwest and asked about setting up an ISA, only to be told that as an existing customer I couldn't get a decent interest rate - they then advised me to go to another bank, set up an ISA and then come back to them to transfer it, at which point I could get the highest rate. Treating your customers like dirt is a bad way to do business.
The latest fiasco is just too much, as it was entirely self-inflicted. If a company keeps cutting its ICT staff - especially with the severity talked about here - it will almost inevitably end in disaster at some point down the road. I appreciate that banking systems are incredibly complicated but aggressive cost savings clearly took things too far. We have plenty of qualified ICT workers in this country, yet RBS would rather sack them and save a little bit of money by shipping everything off to India. It's super-capitalism gone mad.
I'm looking for a bank that has online banking, a mobile app, that wasn't part of the banking collective that destroyed the economy and that treats its customers with a modicum of respect. That's probably asking too much but what are the real options? I'm interested to see what Virgin Money does when their current account is launched next year.
Somewhere in RBS there is a list of names of the people who decided to offshore the daily batch control work to the cheapest operations staff. These people didn't ensure these cheap offshore operators were properly trained and had proper controls in place.
These people should be fired including the senior managers at the top of the chain who insisted on unsafe cost cutting.
The cost to the bank in terms of reputation loss and recovery will be enormous, far exceeding any savings made by going cheap. Has RBS properly evaluated the real cost impact of laying waste to its technology human capital in the UK?
Has its managers changed the support teams from people who care about their work to those who just regard it as a job to earn low wages while working awful hours? That might be okay at the counter of a fast food store but not in a key business team.
Given that it was one person who caused the error I have no idea why everyone is blaming staff cuts and outsourcing. The people in the onshore and offshore departments were all fully trained, and had there been more staff around that guy would STILL have pressed the wrong button.
IT departments are some of the most overstaffed I'm aware of, and the sheer number of comments on Reg articles posted during the day is proof of that. Most people I know in IT average 1-2 hours of actual work a day. The real problem is that there are too many staff in IT which is keeping wages for the 10% of actual competant IT workers down. And I know I'm not alone in thinking that if the 90% were laid off, I would have less work to do rather than more!
"The people in the onshore and offshore departments were all fully trained"
Might have been fully trained, but doesn't mean they fully learned. Doesn't mean that those fully trained individuals are still working on the same project or even for the same company.
My experience of off-shored sys-management is that they have a _very high_ staff turnover (measured in months not years). As they acquire skills (on paper) and additional (limited) experience, they seek better paid jobs - nothing wrong with that as they're paid peanuts (with no chance of a pay increase since that would increase the off-shoring costs and that can never be allowed to happen). So, handovers fail to happen and the half-learned skills are repeatedly diluted until the systems are running on autopilot.
But that's ok - the bean counters who initiated the off-shoring, have reduced costs, they got their bonus. It's not their fault that the systems are running at risk (not that anyone knows that anyway) - that is someone else's problem.
Any company that uses off-shoring to maintain profitability has run out of ideas. They have given up on innovation, and are relying on the bean-counters to keep the wolves at bay while they wring every last penny out until they leave / retire. They are advertising themselves as failing and that is why off-shoring is so often kept a secret.
It might only be one person, but that person was working for RBS on the basis of selecting the cheapest and not necessarily the most competent. The staff cuts led to a lot of experienced staff losing their jobs. With them went a huge amount of business knowledge. Knlowedge that they had picked up and fine tuned over many years. Replacing them with someone who might know CA7 but who is not experienced in all it's nuances is the fault of the RBS management who dictated that everything should be outsourced.
Bean counter mentality. Look at the figures, but not at the overall picture. Outsourcing only works when you outsource non-key parts of your business or stuff that can use economics of scale. A bank's key part is it's computer systems and software. Banks MUST NOT outsource that. They can outsource the printing of statements, and alll the other letter stuff for instance as that is not a key part.
The fact that FTSE 100 companies directors salaries have risen 12% in the last 12 months because "we need to pay the market rate to get good people" would imply these people know that that paying the least possible tends not to get the best work.
Doesn't apply to people who actually do something apparently.
I've worked with a few (developers) from China - all young, keen, pleasant but very little experience and some with poor english / communications. Sounds like the RBS / India experience was similar.
Being UK based doesn't make you a better worker (and certainly not a better human being!!!) but 20 or 30 years experience and working in your native language makes a difference.
Dear <username>,
I was a loyal RBS IT employee for 27 years, until they decided to offshore my job to India, making me redundant. <Link to genuine El Reg coverage>
Now, I face personal bankruptcy and my children will have to leave college. My house will be re-possessed and my wife is leaving me for an RBS manager.
Fortunately, before I left the office here in Lagos, I was able to use my IT skills to transfer over $132million to a secret account. This account does not even appear on official audits because I have made it 'invisible.'
Are you a trustworthy person who can help me get some revenge on the stupid managers at RBS? Please send me your personal details and I will give you 50%.
Yada yada.
p.s. Sorry - forgot the typos and Caps-lock.
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