Fidelity Investments' passage to India

Fidelity has a centre in Bangalore

One of the world’s largest financial services providers is set to shift critical work to India to meet skills shortages and cut costs.

Fidelity Investments, which manages $180bn in assets, uses 4,000 software applications and about 5,000 servers across three datacentres.

To support the scale of Fidelity’s global IT operation, the firm set up its own IT operations in Bangalore and Chennai ­ a practice known as captive centres ­- which employ 4,500 people, including IT and business process outsourcing staff, who perform 25-30 per cent of the workload.

“Our objective was to create captive centres where we could tap into a large talent pool. As a result, some work that would have been done in the US is now done in India ­ and just as well, and at substantially lower cost,” said Fidelity’s IT country head in India, Jayesh Chakravarthi.

“For example, financial services firms such as ourselves use a lot of mainframe computing and competence in that area has been dwindling in the US, whereas in India we have a lot of expertise.”

Fidelity’s team in India designs and develops systems and provides support for live applications. Chakravarthi said the requirements for his team will remain largely the same in the next 18 months, but there is an urge to do more important projects.

“Captives don’t grow indefinitely as service providers do. High value-added activities such as business requirement gathering, systems analysis, high-level design and low-level architecture become very valued pieces of work as opposed to just development and maintenance,” he said.

Chakravarthi said that while some may argue that a captive can be more expensive than a third-party outsourcer ­ he estimates the cost gap between a captive and external provider to be about 10-15 per cent ­ companies often feel the cost is worth it because of the added protection to intellectual property and sensitive data.

“There is a hidden cost in doing work from a 10,000-mile distance. However, even if you add that extra expense you still have a substantial cost gap. Cost equalisation is about 25 years away,” he said.

Being able to focus on a single customer is one of the benefits of the captive concept, said Chakravarthi, whereas third parties are challenged by the limited amount of information they can get from the customer.

“We often send people abroad to better understand business requirements,” he said.

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