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According to Lester Gray, Schroders' chief operations officer, the impetus to outsource stems from a realization that internally maintaining all technology systems while concurrently remaining cutting edge in all areas of IT was a job best handled by a company focused on technology.
A traditional search was conducted, involving a request for proposal (RFP) sent out to "the sort of usual candidates that you would expect," says Gray (he refused to name other consulting firms Schroders evaluated). Finally, CSC was chosen in a seven-year, $240 million deal--a price Gray described as cost competitive.
"We were looking for a firm that had depth with international capabilities, a firm that had the experience of servicing financial markets' firms, investment managers, investment banks. We wanted a firm that we felt comfortable working with and that really came down to the individuals working on the account," says Gray. "We thought that CSC had a reasonable, flexible approach to how the contract was to be structured and that flexibility was borne out."
Vice President for CSC's European Global Securities and Fund Management business Paul Hart says the deal is a full-outsourcing arrangement, consisting of application as well as infrastructure responsibilities, including computer operations, desktop architecture, engineering, product development and telephone support.
Also, Schroders will transfer approximately 200 IT employees over to CSC as part of a practice called "transfer of undertakings and protection of employment" (TUPE)--an arrangement instituted to ensure continued employment for people working with functions that have been relocated to another company. Hart says an extensive timeline has been worked out with Schroders, one aspect of which covers internal customer care. That service will see CSC personnel handling technical calls from Schroders' staff by leveraging CSC-enhanced Computer Automation technology which allows IT personnel to remotely take over a users PC, facilitating a quick fix. Also, CSC will upgrade Schroders to Windows 2000, a major project for a financial institution but second nature to CSC.
Server consolidation is on the menu of services as well. Hart says that if he is to maintain service level agreements (SLAs) that comprise part of the outsourcing contract, the large number of Unix and Intel servers at Schroders must be reduced. He says he favors using a smaller number of larger servers, retaining the same vendors while moving upscale to more advanced multiprocessor models.
"I can't afford to have myriad servers of mixed varieties," Hart explains, "so having a look at what they have and reducing those numbers--maximizing the use, while at the same time keeping a focus on the maximum up-time, is the key." Although outsourcing technology work is a major trend in financial services, how does an executive know if it's the right decision in any particular case? Hart lends a guide.
"They're doing it for all the right sorts of reasons," he says of the Schroder's outsourcing deal, "the ones you usually articulate for outsourcing, it's a long-term partnership so they're trusting us to provide what they perceive as non-core competency services, they expect us to add value in those areas and we do that by leveraging the scale of what we are."
That scale is quite extensive in scope. The El Segundo, Calif.-headquartered CSC had revenues of $10.5 billion for the 12 months ending March 30, 2001 and employs more than 68,000 people worldwide.
"We take problems away," adds Hart. "Beyond providing day-to-day service, we provide that value add of understanding where they are trying to go and come up with ideas of how to get them there cost effectively."
For more information on CSC, visit www.csc.com or e-mail James Cook, CSC president of Global Securities and Fund Management at jcook8@csc.com.
