Citigroup (C.N) is planning to significantly cut back its dependence on IT contractors and hire thousands of IT employees as it deals with regulatory penalties related to data governance and inadequate controls.
According to an internal presentation reviewed by Reuters, Citigroup’s head of technology, Tim Ryan, informed employees in the past few weeks that the bank intends to reduce the proportion of external contractors in IT from 50% to 20%. The briefing lacked a specific timeframe for the changes.
The presentation indicated that as part of the revamp, Citi plans to bolster its workforce by bringing on more staff and aims to increase its technology personnel from 48,000 in 2024 to 50,000.
In a statement to Reuters, Citi announced, “Citi is enhancing our internal technology capabilities to back our strategy aimed at improving safety and soundness, facilitating revenue growth, and promoting efficiencies.”
The most recent specifics of the IT overhaul, presented here for the first time, demonstrate how Citi is trying to satisfy regulatory requirements for enhanced risk management and data governance within the bank.
In June of the previous year, Ryan switched to Citi from PwC, just a few weeks prior to the bank being penalized $136 million by regulators due to inadequate advancement on persistent data management issues.
In January, chief financial officer Mark Mason stated that Citi is increasing its investment to tackle its data problems. The lender reduced its profitability target for 2026, which is closely monitored, as it deals with increasing regulatory costs.
The presentation revealed that the lender cited a $22.9 million “recent fraud event” involving external contractors as one instance of its IT challenges.
A source familiar with the situation, but who would not disclose the exact figure, stated that the $22.9 million also encompassed legitimate work. The individual requested anonymity in order to talk about the issue publicly.
The fraud, although minor relative to a bank’s $12.7 billion earnings in 2024, further illustrates the magnitude of Citi’s challenges as it seeks to decrease its dependence on external employees.
As Citi stated, “On the rare occasions that we identify fraudulent behavior, be it from a vendor or within our own ranks, we respond without delay to ensure those culpable are held accountable for their actions.”
In September, Citi alerted certain employees regarding fraud and unethical conduct, mentioning that it was contemplating a closer examination of contractors.
According to the briefing, the lender could reduce the number of external suppliers from 144 to 50, and over time, the bank intends to raise the proportion of employees in higher-cost locations. It deems locations like New Jersey, New York, and Irving in the U.S. to be of high cost, while it recognizes Chennai in India, Belfast in the UK, and Warsaw in Poland as low-cost locations.
Next year, the bank intends to relocate the IT team currently based in Rutherford, New Jersey, to a consolidated site in Jersey City. Rutherford will not host any technology operations, though the bank will maintain other teams in that location.
