Featured Case Study

Major international bank uses Procurement (source-to-pay) Outsourcing to reduce costs and more effectively manage spending

Scope: Procurement
Geography: Global

Situation
A leading international financial service provider with 69,000 employers servicing clients in over 76 countries suffered from one of the highest cost income ratios in the industry. The bank instigated a significant cost cutting and restructuring program with a greater focus on innovative sourcing solutions and leveraging of offshore sourcing and/or outsourcing. This program included outsourcing the procurement function through a competitive tendering process.

Approach and Solution
The bank’s procurement system was replaced by the supplier’s platform, interfaced into the bank’s retained SAP systems. All procure-to-pay processes and some strategic sourcing activities were moved to the supplier; support came from local hubs and offshore locations in India and Bratislava. About $6Bn of spend is managed through these processes. The bank retained some front-end strategic sourcing activities and can also tender individual sourcing projects to the supplier or other suppliers on a case-by-case basis.

Result
The bank can now focus on effectively managing its strategic suppliers.  During the course of the deal it is expected that the operating costs of procurement will be reduced by around 25% through offshoring and aggregation of resources within a multiclient environment. In addition to the direct cost savings, the bank expects to save around $1Bn in improved compliance during the course of the 7-year contract.