RBS denies $2-billion outsourcing reports

Royal Bank of Scotland has denied it is planning to outsource up to $2 billion worth of back office and application development projects over five years to firms in India. Some recent reports in a section of the press had claimed the bank was looking to outsource projects to Indian companies (See: Royal Bank of Scotland to outsource projects worth $2 billion to India). 

RBS spokesman, Neil Moorhouse said the story was not correct.

Stephen Hester, chief executive RBS, had said last week that the bank would address under-investment in IT and spend over £6 billion towards efficiency improvement over the next fiver years.

Meanwhile, analysts say the Indian IT sector is likely to witness a revival of demand and in the second quarter many IT companies may report volume growth after declining trends over three successive quarters. They add that margins too will look up.

They forecast that the top three companies will experience 2-3 per cent volume growth even as some impact will be felt from trailing pricing cuts. Pricing would decline about 1 per cent with the biggest positive in the quarter being, the US dollar's decline against a broad set of currencies versus the pound, the Australian dollar and the euro.

Analysts also expect margins to improve markedly even though companies braced for margin falls in the quarter. They say margins could be stable or even improve during the quarter on the back of volume growth that will be better than what they have guided for.

However, they point out that the rupee which appreciated by nearly 3 per cent against the dollar could be a problem and with companies not hedged to absorb the appreciation it is one negative in the outlook.