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Recent reports in the business press have dwelt at length on the idea of “high-end” and “low-end” work. Some of these reports seem to suggest that some work, such as call center work, is routine and can be seen as “low-end,” whereas other work, such as financial analytics and investment banking research, is “high-end.” The lay reader may well take away the impression that in the global sourcing and delivery of financial services there is a clear understanding of what constitutes low- and high-end work and that corporations in the United States and Europe innovate while their service providers in Asia and other low-wage regimes provide routine low-end services at low cost. There is a widespread assumption in media coverage of these trends that the so-called high-end work is complex whereas the low-end work—as typified by a tech support call center—is essentially low-complexity work. As we show later in this chapter, this assumption both is wrong and reflects a poor understanding of the subjective nature of complexity. To understand how global sourcing of services drives innovation and how the nature and extent of the innovation is itself determined by the subjective perception of complexity, it is necessary to first understand the globalization of the financial services industry.

The Scope and Growth of Offshore Activities in Financial Services

The phenomenon of globalization of financial services has both supply and market (demand) side implications. Large multinational financial services corporations such as American Express, Citigroup, and HSBC Inc. have established a significant sourcing and market presence in Asia and Europe. These companies have a retail, corporate, and investment banking presence in Indian and Chinese markets. In addition to these traditional financial services, investment and risk-based financial services are also offered by multinational VCs and private equity firms. To compete against local companies, the aforementioned firms have to constantly innovate and deliver services to niche segments such as urban retail customers in India.

Citibank launched its web-based corporate banking products in 2001 to capture a significant chunk of the market for cash management and trade services. The bank then rolled out this product widely in the Asia-Pacific region (Malaysia, Australia, Singapore, and Hong Kong) and later into India and parts of Europe.2 The bank found a new way of distributing corporate banking services via the web based on a flexible electronic product that linked the bank’s front office to the clients’ back offices. The web-based banking services that the bank launched in Asia and the United States were based on creating a flexible suite of corporate banking products that would connect their clients to the bank’s service delivery portals, provide a set of tools to the clients to automate and manage their accounts


Citibank’s e-Business Strategy for Global Corporate Banking, HBS Case Study, HKU197, 2002, Center for Asian Business Cases, University of Hong Kong.

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