Case Type: reduce costs.
Consulting Firm: Diamond Management & Technology Consultants (now PwC Advisory) 2nd round job interview.
Industry Coverage: financial services; software, information technology (IT).
Case Interview Questions #00371: Your client Morgan Stanley (NYSE: MS) is a global financial services firm serving a diversified group of corporations, governments, financial institutions, and individuals. Headquartered in New York City, New York, United States, Morgan Stanley also operates in 36 countries around the world, with over 600 offices and a workforce of more than 60,000.
Recently, Morgan Stanley has been approached by technology and consulting giant IBM (NYSE: IBM) with a business proposal to outsource all of their IT needs to IBM. IBM claims that it can save the financial services firm 10% off their current annual IT budget. The Chief Information Officer (CIO) wants to know whether to use IBM or not. His question to you: How can IBM possibly save this firm 10% off their current IT budget?
Additional Information: (to be provided upon request)
- Currently there are ~65k employees at Morgan Stanley. Of them, 6k are in IT department.
- Of the 6k IT employees, 5k are internal and 1k are external.
- An “external” employee is an consultant (not an actual employee of the firm).
- Internal employees are just regular employees.
- Morgan Stanley’s current IT budget is $1.5 Billion.
1. Areas of IT Costs
First, the candidate should be able to define the following categories of IT costs in Morgan Stanley’s operations. The interviewer will provide the current budget data to candidates only if they successfully identify the areas. (Note: Do not show them this table directly)