human capital

IT Services: A Force Multiplier?

The following is the opening segment from our most recent study - "IT Services and Strategic Impacts for Global Banks: The Force Multiplier" -  published via our partner, Aite Group. Learn more about how to access the full report here. Today, outsourced IT services are firmly embedded in all industries and most large corporations. Alphacution’s message to financial sector clients and other buyers of IT services is both blessing and curse: The global IT services sector continues to be dominated by lowest-cost, predominantly India-based human capital, and the motivation to engage with these services continues to be, as it seems to have been all along, about labor arbitrage, or the savings harvested from the reduction of high-cost, U.S.- or U.K.-based in-house human capital in favor of lowest-cost, leased human capital. Although the expectation to improve performance—via higher-quality output, more efficient output, or some other cocktail of innovation—is rarely made explicit, we believe that the potential for enhanced process efficiencies adds value to the equation. This is the blessing part. The potential [...]

By | 2017-06-12T22:07:35+00:00 June 13th, 2017|Alphacution Feed|

@DeutscheBank: Predicting the Pace of Shrinkage

If today's announcement by Deutsche Bank CEO, John Cryan, is to be believed, total group headcount is set to be reduced by 9,000 souls. Note that these reductions will come from a year-end 2016 flock of 99,744 (which, by the way, is still within 2.3% of the all-time high of 102,062 set at year-end 2010). We decided to look into our DB model to take a quick read of the expected pace of these reductions. Here's the setup: Over the 40 quarters from Q1-2007 through Q4-2016, 21 of those quarters represented total headcount reductions. Furthermore: The maximum headcount reduction in a down quarter was -2,256 FTEs (full-time equivalents); The average headcount change over the 40 quarters (not counting an acquisition in Q4-2010) was 880 FTEs; and, The average of the 21 quarters with headcount reductions was -668 FTEs Separate from an outright sale of a business segment (which is being contemplated here in the form of its DB Asset Management arm), organic shrinkage is painful and can take more time than originally anticipated. At [...]

By | 2017-02-06T20:34:06+00:00 February 3rd, 2017|Alphacution Feed|

#PassingTheBuck: Deutsche Bank / Hewlett-Packard Enterprise Case Study (Part II)

Part I of this post can be found here Here’s the central question: After one year, does Hewlett-Packard Enterprise deliver tech savings for Deutsche Bank? (And, is this a harbinger or a template for other large banks and market participants?) With the Annual Report and other financial disclosures released on March 11, 2016, Deutsche Bank (DB) has completed its 2015 reporting. Our original curiosity here was to determine if a technology outsourcing alliance between Hewlett Packard Enterprise (HPE) and DB – which was announced about a year ago in late February 2015 – has resulted in any observable impact on the technology spending patterns at DB. With a fully updated model in hand, the results provide some strong signals – and some additional curiosities. Here’s what we find: First, estimated year-over-year spending on hardware and infrastructure – a component of TCO where HPE is expected to have the most impact – is down $405 million 2015 vs. 2014, which represents an 8% improvement during the period – and is about [...]

By | 2016-12-09T19:34:26+00:00 March 16th, 2016|Alphacution Feed|

#TechnicalVirtuosity: The Player is the Special Sauce

Once upon a time, a few clicks back into my youth from now, I fancied myself a fairly decent piano player. That illusion came to an abrupt demise when I met Fred Johnson. On the surface, Fred was as milquetoast-Midwestern as they come. You might have expected hay to fly out of his mouth when he spoke. But, that assessment would have been seriously flawed, as I soon learned. It turns outs that Fred was blessed with perfect pitch, had any number of the very long and complex Rachmaninoff and Prokofiev concertos perfectly lodged in memory, and the speed of someone afflicted with the gift of 25 fingers – and all by the 9th grade. He was a quintessential virtuoso as far as I was concerned. What Fred produced at the same piano and with a quick glance at the same sheet music as I had been laboring over for weeks were two entirely different definitions of music. In short, I would need to discover my own virtuosity away from [...]

By | 2016-12-08T22:31:31+00:00 November 19th, 2015|Alphacution Feed|