UBS Cuts Outsourced Tech Jobs

UBS has significantly reduced its dependency on third-party vendors and on outsourced workforces in a bid to grow profits and retain in-house knowledge.

The Swiss bank has cut over 3,000 jobs in its external workforce in the last two years, primarily roles across technology operations. 

Speaking at a roundtable on November 21, Sabine Keller-Busse, group chief operating officer and president of EMEA at UBS, said that the bank has reduced its external workforce by 8,000 people and replaced them with 5,000 internal employees.

“We were dependent on providers, so we in-housed the strategic know-how, mostly in technology, that we deem critical for our bank to own and further develop,” Keller-Busse said. “This has been of great benefit and we have seen productivity growing massively. We see the stability of service because we manage people directly and we have this nice effect of saving money because we don’t have the profit margin to pay.”

The bank is undergoing an operational revamp to reduce costs and automate processes across the institution, particularly as it looks to bounce back from weakened revenues in 2019 compared to 2018.

In UBS’s financial reports for Q3, its net profit attributable to shareholders was $1,049 million, down by 16% year-on-year. In March, UBS’s chief executive Sergio Ernmotti told a conference in London that it was making additional cuts of $300 million across the bank and more recently announced a further $90 million savings target, largely through restructuring the investment bank and shedding jobs in senior-level investment bank roles. 

According to Keller-Busse, over the last few years, the investment bank has built out 12 business centers in five different countries, including in Switzerland. A large portion of its technology workforce is now working out of Asia and Eastern Europe. Today the bank has over 5,600 tech employees in India, 3,600 in Poland and a few hundred in China.

As a result of the cuts in outsourced contractors and vendors, the bank has delivered a savings of somewhere in the region of hundreds of millions over the last two years, Keller-Busse said.

Additionally, USB is also controlling its third-party spending by reducing its use of external strategy consultants. As a result, it has built an internal in-house consultancy group of around 500 people that work on technology projects on an on-demand basis.

A crucial benefit of reducing the dependency on outsourced advisors is to avoid proprietary knowledge or information on project development being shared externally, particularly as consultants can work with competitor firms.

“The good thing is we can keep knowledge in-house,” Keller-Busse added.  “A lot of projects involve digital change, so we now have our own consultancy team. “

By cutting its use of external consultants, the investment bank says it has made a multi-million annual saving, described as in the region of “double-digit millions”. UBS could not disclose the exact figures for its annual savings for cutting its outsourcing workforce and external consultants.

However, UBS still uses some consultants, such as Oliver Wyman, McKinsey, and Accenture, for more complex projects, particularly those that require special expertise.

Digital Curriculum

As part of the bank’s digital strategy, earlier this summer UBS launched what it calls a “digital curriculum”: a business-wide program that will offer digital and technology training to banks’ entire 65,000 internal workforce.

“It is important to us to have our entire workforce be skilled and ready for the future,” Keller-Busse added. “This is actually a big challenge in the industry and what we have done is invented and invested in what we call a digital curriculum. “

Employees will initially be given online lessons that will provide a basic understanding of the importance of technology across the bank, looking at areas such as coding, automation, artificial intelligence, and cloud technology.  

Level two of the digital curriculum program will involve more specific training relevant to the employee’s role and level three will consist of workshops with providers and other third parties.