UBS is planning to build its second centre in India but it won’t help in job creation. Here’s why

Indian techies won’t benefit from the second centre of the Swiss banking major UBS in India as it is looking forward to doing nearly 60% of its technology and operations work in-house. This move will take work away from Indian IT companies.

UBS has always been a generous spender on IT and BPO services. UBS joins financial firms like American Express, Bank of America and consumer company Procter & Gamble to take work back in-house. The trend however, didn’t worked well for the Indian IT sector, which has already seen growth slow down as clients hold on to their purse strings.

"We have centres in Poland, China, the US and in India. We are notionally targetting doing about 60% of work in-house and using vendors for the rest,” Markus Lickert, global head of UBS Business Solution Centres, told ET.

The company currently outsources about 70% of its technology and operations work.

"In the next 3-5 five years, I expect there will be a consolidation. The company's insourcing strategy had been created in 2014, when it decided to build centres that would hold its IT and operations work. UBS is now building its second centre at Navi Mumbai to mainly do risk management work, though in time the centre is also expected to provide services related to IT infrastructure management. The centre will open next year and we think it would initially hold 1,500 people. But when you establish such centres, there is a growth plan, so we can put up to 3,000 people between UBS employees and our partners,” Lickert told ET.

The centre will hold UBS employees as well as some from UBS' outsourcing vendors.

In India, UBS work with companies like Cognizant and Tata Consultancy Services.

Likert also said that there would likely be more insourcing among the financial services companies as they look for more innovation.

"I would support the idea there is more work going in-house particularly among the financial services industry. We are looking to be more differentiated and we have seen our IT and BPO partners sometimes struggle with the pace of innovation,” hetold ET.

According to the experts, Indian IT players could do more to hold on to the business.

"Sometimes Indian IT companies do not offer automation and outcome-based pricing because they are scared of cannibalising their revenue, especially where the contracts are FTE-based. They should start offering this to the more mature clients who are looking at insourcing,” Dinesh Goel, India head at outsourcing consultancy ISG,told ET.

The National Association of Software and Services Companies have slashed the expected growth rate for the industry to 8-10% from its previous estimate of 10-12% growth.