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Outsourcing, the Royal Bank and Kevin's Take


I took off on vacation for about ten days … and while I was gone it appears that RBC received some negative press.

It is always interesting to see the spin that the press put on these situations … of course the mundane does not sell news, and it is always more juicy when you can blame a big profitable organisation for picking on the little guy.

Here is my take …

1.  Outsourcing is nothing new … the banks have been outsourcing for years, for many reasons, just SOME examples might be (a)yes saving money (so they can be as efficient as possible for their shareholders); and (b) to have work done more efficiently by an organisation that specialises in that work; (c) to offload the management of a function and the associated people.

2.  RBC outsourced some work to iGate.  This meant that the current 45 people doing the work would need to go.

3.  RBC is one of the biggest employers in Canada and has a huge IT shop.  They are always adding talent to their shop … it is just not feasible to me that there would not be a place for these people somewhere in the organisation.

4.  The financial services sector in Canada is one of the strongest sectors, with constant demand for resources.  The people doing the work should have no trouble finding work.

5.  The problem with this deal is that the outsourcing company (iGate) have to go through a knowledge transfer process, which is (a) standard procedure and (b) best done face to face, rather than from abroad.  Once the knowledge transfer happens the work will move offshore.  The transition period is likely to be months long, and using temporary workers to replace the RBC staff just looks bad.

6.  Here in Canada we will be facing more and more skill shortages in the coming years and that will necessitate more of these kinds of deals.  In order for Canadian companies to compete on the world stage they need to have access to talent … that will mean more outsourcing, more use of temporary and contract labour plus partnering to ensure the work can get done.  Just a reality.

7.  In my humble opinion the RBC spokesperson interviewed by CBC, who is clearly a super bright individual, could have been a lot better prepared and should probably engage a media expert to help.  This situation needed clean crisp messaging … which might have helped the bank to not look quite so bad!  Having been on the wrong end of a few media interviews I know how easy it is to look bad if you don’t prepare properly.

My bottom line:

If you are ever on the wrong side of a news story get help in telling your side … getting the messages right is not so easy.