Royal Bank of Scotland

Royal Bank of Scotland Plc, now part of the NatWest Group, was an early entrant in the Global Capability Center (GCC) space in India. This followed its acquisition of businesses from Churchill and ABN Amro, along with their Services GCCs in India.

Client/Employer

Year

2012-2013

Category

Strategic Outsourcing

Type of Work

IT Infrastructure

IT Service Management

Strategic Outsourcing

Negotiations

Cost Management

Post Merger Integration

The months following October 2007, when RBS formally acquired ABN AMRO, were marked by uncertainty in the banking sector and significant internal changes at RBS.

The collapse of Lehman Brothers in September 2008 triggered a credit freeze and widespread panic in global markets, further straining RBS’s already weakened liquidity and capital reserves.

The integration of ABN AMRO's wholesale and investment banking unit, along with its Asian business, was still incomplete when, in October 2008, the UK government intervened to rescue RBS as part of a broader effort to stabilize the banking sector.

As a condition of the bailout, RBS underwent extensive restructuring. This included the sale of non-core assets, scaling back its investment banking operations, and shifting focus toward retail and commercial banking.

What followed was a decade-long period of divestments, portfolio sales, and multi-year cost optimization programs designed to restore the bank to sustained profitability.

In April 2011, the founding partner of Concinnity was hired by RBS at their India GCC to lead a series of Strategic Cost Initiatives.

One of the key initiatives was the Strategic Outsourcing of RBS’s IT Infrastructure and IT Service Management portfolio. The goal was twofold: to unlock cost and operational efficiencies while rationalizing the IT infrastructure and service management assets inherited from ABN Amro.

Within a week of assuming the role, he launched a comprehensive review to inventory and assess all teams, contracts, suppliers, and locations involved in IT Infrastructure Support and IT Service Management across the US, UK, and Asia, encompassing both go-forward and divestment businesses of the bank.

Based on insights from the CTO and CIO leadership teams, a detailed scope-bank was finalized for a competitive tender of the IT Infrastructure and IT Service Management portfolio. This scope included services across:

Data Centers
Networks
Storage
End User Computing
Information Security
Application Management
Virtualization of Assets

The service scope was carefully designed to support the go-forward businesses, branches, and divisions, while excluding critical services and roles that were planned to be retained in-house.

An RFP was developed with the outsourcing scope comprehensively detailed, including:

Work Breakdown Structure
Work Packages
Services Catalogue
Scope Boundaries, Inclusions, and Exclusions
Activities and Deliverables
Performance Standards
Inventory and Assets Registers
Dependencies
Roles and Responsibilities
Evaluation Criteria
Desired Commercial Constructs for each service and work package.

The Procurement team facilitated the process of inviting partners to respond to the RFP. The responses were meticulously evaluated and scored by a broad-based panel comprising representatives from the CTO, Procurement, Finance, and COO functions.

The two shortlisted partners engaged in Best and Final Offer (BAFO) negotiations, culminating in a multi-year contract with the selected partner.

The contract encompassed:

Transition Services Agreement: Covering the transition of approximately 430 roles and related services.
Steady-State Services Agreement: Underpinned by Service Level Agreements (SLAs) and Service Level Commitments (SLCs).

The outsourcing contract included multiple Statements of Work (SOWs) for distinct work packages, utilizing diverse ownership and commercial models such as:

Rate Card Pricing: For staff augmentation services.
Outcome-Based Pricing: For infrastructure change initiatives.
Transaction-Based Pricing: For service desk operations.
SLA-Driven Reward and Recompense: Incentives and penalties tied to service level performance.