Wipro Cost Cutting Presentation

© 2012 WIPRO LTD | WWW.WIPRO.COM 1

Not Just Another

Round of Cost-Cutting: Why the Financial Services

Industry Needs to Create

Permanent Operating

Efficiencies


Why mere cost-

cutting wont’ cut it

anymore

It happens all the time: the markets

are down, profits are falling, and a

major financial institution

announces cost cuts and lay-offs.

While the stock market may rejoice,

such cuts simply return a bank to its

status quo; and as the market or

the economy rebounds, staff levels

inch up and the bank's cost basis

returns to previous levels.


The new reality

The industry must change its mind set towards short term cost cuts. There are forces at play that make a

change in the industry's mindset an imperative:

The growing burden of meeting

regulatory requirements,

adding to expenses

Innovation in financial

services is running low,

drying up revenue streams

Scale is no longer a

major factor in competition

The financial services

industry is becoming

increasingly commoditized


Look for inspiration to the manufacturing industry

• The financial services industry must create permanent efficiencies by

reducing processing costs and increasing productivity in delivering

services.

• In manufacturing, knowing the "cost per unit" is part of the industry's

DNA.

• By understanding the cost of each element of the production process,

a manufacturer can tinker with the components of his supply chain

and use alternative delivery approaches to drive efficiency and

productivity

• Similarly, financial services executives must try to achieve the same

long-term productivity improvements and cost efficiencies as

manufacturers by looking at their processes as a series of supply

chains—that is, by focusing on the microeconomics.


Leveraging manufacturing concepts in Service Delivery Operations

Manufacturers have been managing productivity with Cost of Goods

•Processes are easily replicable, so they must constantly improve efficiency

•Statistical techniques exist to assess productivity

•Process inputs are discrete, and end-user consumption is objective

Traditionally, the service industry has largely ignored such practices

•More expensive "knowledge workers" are often considered irreplaceable, e.g. bankers

•Intimate customer interactions open providers to subjective notions of quality

•"Invisible" inputs and outputs can lead to defense of the status quo

However, service managers can adopt certain concepts to improve performance

•Unit Cost

•"Factors of Production"

•Cost of Service Delivery

7

© 2012 WIPRO LTD | WWW.WIPRO.COM

Hyper focus on "Cost of Trade" support similar approach...


Units of work and distinguishable knowledge steps in the process

Process Disaggregation

Breaking down process steps helps identify "Units of Work":

7


End-to-end

process view of

costs allows you to

identify which

process steps are

most resistant to

cost programs.

"Units of Work"

provide insight into

how an operation is

resourced and

made more

productive for given

transaction

volumes.

Knowledge-based

steps that require

expertise can raise

the cost of the

overall process,

and inhibit

productivity.

INSIGHTS:

Customer Service

Trade Processing

Cash Processing

Corporate Actions

Income

Capture

Validate Data

Scrubbing & Enrichment

Clearing & Settlement

Notification

Compile Vendor & Custodian Data

Create New Asset ID

Monitor/Escalate Data Critical

Actions

Communicate Complex Booking

Decisions

Research & Resolve

Exceptions

Unit of Work:

Corporate Actions

Unit of Work:

Data Scrubbing

Unit of Work:

Processing

# of transactions

processed

# of transactions

processed STP

vs. Manual

Level

1:

Level

3:

Level 2:

Knowledge Step

Output Step


Cost trending only provides part of the picture; Do not target improvements

7


Unit of Work Analysis

Increased Total Unit Cost

(Labor)

Labor $

Labor Hours

#L2 Recons

Labor Hours

#Trade

#L2 recons

Possible

Causes

Analysis

Needed

Observation

In order to answer the “#L2

Recons” question, multiple data

sets are required:

Available?

Data set Cost Process

Total FTEs in group Yes No

Current efforts for time period Yes Yes

#Reconciliations, by type Yes Yes

Reconciliation time

parameters

No Yes

Reconciliation frequency No No

Understanding the microeconomics at the process level can clarify productivity

alternatives

Has the

cost of

labor

increased?

Have

workers

become

less

productive?

Have fewer

exceptions

been

generated?


Getting a clearer picture

The big picture

• Delve into what’s driving your costs, why your costs have increased over time, especially relative to underlying transaction volumes

• This will help to identify trends and pinpoint causes

Unit work metrics

• Start establishing unit of work metrics for each of your major processes and their components

• Distinguish between pure knowledge steps, such as assessing risk, and output steps, such as validating customer information

Areas for change

• At this point, some clear areas for change should become apparent

• Tweak your processes to create and manage process efficiencies


Points to bear in mind

Before you start tweaking your processes, here are some questions to ask:

• What processes are the major drivers of cost and productivity?

• Is the size of your operation appropriate for the transaction volume and service delivery processes?

• Are expensive specialized knowledge-based processes distinguishable from inexpensive output-based processes?

• Where has the unit cost increased or productivity decreased in the existing processes?

• Where have resources been increased in the processes?

• Have labor and non-labor costs increased? Have workers gotten less productive?


Conclusion

• Once you have gone through this process you should have a

clear picture of how your organization functions—the costs, the

strengths, the deficits.

• You have essentially diagrammed your organizational supply

chain—and with that knowledge you can make educated

decisions on how to create and manage process efficiencies

that will endure over time, regardless of market swings.


For more details please visit the link below:

http://www.wipro.com/Documents/resource-

center/CostCutting_Final-May-2012.pdf

http://www.wipro.com/Documents/resource-center/CostCutting_Final-May-2012.pdf








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Wipro Cost Cutting Presentation

Economy & Finance

Transcript of Wipro Cost Cutting Presentation