A post relating to this item from Finextra:
23 June 2009 | 7270 views | 0
Citibank is currently in discussions with Indian IT firms Tata Consultancy Services (TCS) and Wipro, among others, to sell some of its internal IT platforms, according to local press reports.
Citi's recent announcement of a potential deal to sell off IT assets confirms that no matter what the century or circumstance, most things never change. I had high hopes that Citi would emerge from their current troubles as a leaner and stealthier competitor
in the global market, but that hope is diminishing in light of their "death by a thousand cuts" business model.
The floating of intellectual property and proprietary systems as clearance sale, or even garage sale, type merchandise reeks of the vicious cycle of outsourcing/insourcing/re-outsourcing/re-insourcing that banks did in the 80's and 90's with IBM and other
service providers. It did not work then, and it will not work now.
The off-shore firms, whether they be Infosys, Wipro, Tata or (cough, cough) Satyam have moved along the same evolutionary path that every staff augmentation company has yearned to tread. First, they provided bodies. Now, leadership believes that they must
get into engagement-level work with their clients. The problem with this approach is the same as it has always been. Ownership of intellectual property and proprietary systems requires an in-depth knowledge of the business associated with those assets. When
these assets are treated as stand alone commodities that can simply be stripped out and sold to the highest bidder, the end results have generally been a write-off for the acquirer and damage control by the client.
Citi would be better off, in the long run, to spin these functions and technologies off into a stand alone business or sell them (probably at a cheaper price) to a niche firm that has the required business expertise to provide the service expected by Citi
and their clients. Citi keeps cutting itself to death; how much longer until it sells off plum assets like the whole of Global Transaction Services? If this deal is any indication, not long.