AstraZeneca saves $400 mn through in-house IT spending

The company's Chennai facility will have two-thirds of its total number of IT employees by year end

Global biopharmaceutical firm AstraZeneca says that its tnformation technology strategy to shift a large part of its IT operations in-house has resulted in saving over $400 million out of its overall spend so far. The company is expanding its IT facility in Chennai, which will have 2,000 of the total 3,100 employees for the global IT division by the end of 2016, said David Smoley, chief information officer (CIO) of the company.

The company, which currently has around 1,500 employees in the Chennai facility which was set up with an investment of around $11 million, is planning to set up another office in the city with a similar size of investment. The existing facility has a capacity of 1,250 seats and the new facility, for which the place has not been identified, will have another 900 seats, said the company officials.

Speaking to reporters in Chennai, Smoley said that the company set a target to be twice as good at half the cost in IT by setting up its in-house IT division. "From a performance standpoint we grew more than twice, and on cost standpoint, overall AstraZeneca, we have taken $400 million out of AstraZeneca's spend, which is 30 per cent of overall IT spend, to this point and we will continue to be on a glide path to lower cost in 2016 and 2017 and beyond," he said.

In 2013, it had roughly 65 per cent outsourced from a spend perspective, which has now come down to 40 per cent. It is expected to be as low as 25-30 per cent in future.

"Our IT spend has dropped from $1.3 billion in 2013 down to $900 million in 2016. We are going to continue, streamline and optimise it. I expect we will be headed to around $600 million or so in a couple of years," he added. Spend with third parties, in 2013, was around $500 million, and this year the company has come down to $200 million.

"We reduced the third party spend by $300 million. Its not to say that we are completely away from it. We kept our cost on the manpower side flat," said Smoley. The company still outsources a variety of technical projects in the drugs development process, particularly in clinical operations, which are highly regulated and validated systems that have been in place for long time.

Siva Padmanabhan, VP, software shared services and head, Chennai Global Technology Centre (GTC), said that the company, which has a 2,50,000 sq ft facility in Ramanujan IT City, Chennai, is looking at setting up one more facility in Chennai. The existing facility has a capacity of 1,250 seats, while the new facility will have around 900 seats. It in the process of identifying location in the IT parks in the city for the facility, he added. The manpower in Chennai for the company could go up to 2,500 in next two to three years.

During 2016, the Chennai centre will focus on application development and testing, business intelligence and analytics, mobility and support of AstraZeneca's Digital Health initiatives, he said.

With the development of the in-house IT division, the vendor-base is currently around three major vendors and two to three others, said Smoley. The company continues to work with Cognizant, Accenture and Infosys, he said. The company is also open to acquisitions, though there are no acquisition plans at present, he said.