Citigroup (C.N) is making a major shift in its approach to information technology, significantly reducing its dependence on external contractors while hiring thousands of in-house IT employees. The move comes as the bank faces regulatory scrutiny over deficiencies in data governance and risk controls.
Citigroup’s head of technology, Tim Ryan, recently informed employees that the company intends to cut the proportion of IT contractors from the current 50% down to 20%, according to an internal presentation seen by Reuters. However, the briefing did not specify a timeline for these changes.
To compensate for the reduction in contractors, Citigroup plans to expand its internal workforce, aiming to grow its IT staff to 50,000 employees, up from 48,000 in 2024, the presentation revealed.
“Citi is growing our internal technology capabilities to support our strategy to improve safety and soundness, enable revenue growth, and drive efficiencies,” the bank said in a statement.
This IT overhaul, being reported for the first time, highlights Citigroup’s efforts to meet regulatory requirements for enhanced risk management and data governance.
Ryan, who joined Citigroup from PwC in June last year, arrived just weeks before regulators fined the bank $136 million for its failure to make adequate progress in resolving longstanding data management issues.
Chief Financial Officer Mark Mason stated in January that the bank is increasing investments to address its data challenges. These regulatory-driven expenses have led Citigroup to lower its key profitability target for 2026.
One example of Citigroup’s IT challenges cited in the presentation was a $22.9 million “recent fraud event” linked to external contractors.
A source with knowledge of the matter, speaking on condition of anonymity, clarified that the $22.9 million figure also included legitimate work, though they declined to specify the exact fraudulent portion.
While the financial impact of this fraud is small for a bank that earned $12.7 billion in 2024, it underscores Citigroup’s broader struggle to reduce its reliance on external workers.
Citigroup“In the rare instances that we detect any fraudulent activity, whether internally or by a vendor, we take immediate action to hold those responsible accountable for their actions,” Citigroup stated.
Back in September, the bank had already warned some employees about fraud and unethical behavior and hinted at implementing stricter oversight of contractors.
As part of its restructuring, Citigroup is also considering reducing its number of external suppliers from 144 to 50, according to the internal briefing.
Additionally, the bank plans to increase its workforce presence in higher-cost locations, such as New Jersey, New York, and Irving, Texas, while maintaining lower-cost operations in cities like Chennai, India; Belfast, UK; and Warsaw, Poland.
“It seems to be one more step in the reconfiguration of their systems to fix long-standing problems. They are better than they were a decade ago, but still need to improve,” said Wells Fargo bank analyst Mike Mayo.
Citigroup’s stock was down 0.7% in early afternoon trading on Thursday, while the S&P 500 dropped 1.1%. So far this year, the bank’s shares have accumulated a 4.4% loss.
Additionally, Citigroup plans to relocate its IT team currently based in Rutherford, New Jersey, to a consolidated site in Jersey City next year.
While the bank will maintain some operations in Rutherford, technology teams will no longer be based there.
