Banking industry : Société Générale is actively offshoring… with success! – Group 28 @ Sophia

“We are much more focused today on operations and technology and being a low-cost provider than we would have articulated about ourselves 10 or 15 years ago,” Goldman CEO Lloyd Blankfein. Such a sentence could also have been said by Frederic Oudéa, CEO of Société Générale.

In the recent years, the banking industry has been reshaping itself on a global scale. Decades ago, offshoring was a major concern mostly for the heavy industries (automotive, steel industry) but now, it is also a strategy that banks are adopting. Countries such as India (Bangalore in particular) but also Poland, with low labor cost and relatively high education level are becoming « eldorados ». In 2013, the major 11 European and American banks have 82 000 technology jobs located out of their major business area. 
As Alan Johnson (British Labour Party politician) said, there will be “just 25% of the investment banking world’s back-office and operations workers (that) will remain in hub cities by 2024”. Société Générale, one of the major French-banker, is far away from being the exception to the rule. 
What are the outcomes?

When Société Générale first offshored its business in Bangalore in 2000 (as a 100% owned subsidiary called Société Générale Global Solution Centre), it was looking, at first, for cost reduction (labour force, tax deduction, lower real estate prices) required by the heavy competition in this industry. In addition, they were also seeking qualified workers and countries with good business and political environment. The major business units offshored are back and middle offices, IT teams, call centres and human resources. One of the main assets is that it makes them save much time (which also means money). Indeed, with 2 people on both side of earth, you can work 24h a day. Moreover, people from these countries are offered skilled jobs in one of the major Occidental bank, which enable them to gain experience, to spread SG image and be part of the global wealth distribution (see below youtube video).

Surprisingly, some world regions are also getting attractive to Société Générale. Indeed, Eastern Europe is more and more appealing for offshore solutions because it is closer geographically and SG can find talented and skilful persons (so-called “nearshore” lower-cost reduction). The closer you are, the easier it is to manage teams.

However, Société Générale is still reluctant to offshoring strategic and competitive processes that can affect its business. Indeed, if unscrupulous people are given access to information or processes, it can threaten the bank’s competitve edge in the given field. Besides, as co-workers do not share the same culture, there might be some misunderstandings that can affect its business. But despite these very few limits, Société Générale strongly kept and emphasised its strategy and is planning to offshore more and more operations along time. Nowadays among banking industry, Indian engineers are recognized for their unique programation skills (COBOL language) and SG G.S.C. is well known for its innovative and customised business solutions.

Eventually, offshore centres have become part of the global strategy and these are promoting SG strategic development and brand image around the world: Figures never lie and as one can see, SG’s last results prove that it may have been a (very) good choice.

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