Citigroup is revamping its IT workforce, aiming to significantly reduce its dependence on external contractors while hiring for internal positions.

The decision comes as the bank grapples with regulatory demands to strengthen risk management, tighten data governance, and improve internal controls.

Tim Ryan, Citi’s head of technology, recently outlined the plan to employees, revealing the bank’s ambition to cut the proportion of external IT contractors from the current 50% to 20%.

While the timeline remains unspecified, Citi plans to bolster its in-house capabilities by increasing its technology workforce to 50,000, up from 48,000 in 2024.

“Citi is growing our internal technology capabilities to support our strategy to improve safety and soundness, enable revenue growth and drive efficiencies,” the bank stated in response to Reuters, which first reported the plan.

Also Read: Citi unveils AI tools for employees

Long-standing regulatory concerns

The overhaul underscores Citi’s efforts to meet regulatory expectations following a series of compliance missteps.

Ryan, who joined Citi from PwC in June last year, stepped into the role just weeks before the bank was hit with a US$136 million fine for its sluggish progress in tackling persistent data management weaknesses.

The financial burden of regulatory compliance is mounting. In January, CFO Mark Mason acknowledged that Citi’s ongoing investment in risk and data infrastructure had contributed to the downward revision of its 2026 profitability target.

One glaring example of Citi’s IT vulnerabilities was a $22.9 million “fraud event” involving external contractors, as revealed in the internal presentation. While a portion of this sum accounted for legitimate work, the incident reinforced the risks associated with outsourced operations.

“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,” Citi said.

The lender had already warned employees in September about unethical conduct and signalled its intent to impose tighter scrutiny on contractors. As part of its restructuring, Citi is considering slashing its roster of external IT suppliers from 144 to 50.

Also Read: Citi's approach to global DEI leadership

A shift in workforce strategy

Beyond curbing its reliance on third-party vendors, Citi is also recalibrating its workforce distribution. The bank plans to increase the proportion of employees in higher-cost locations such as New Jersey, New York, and Irving, while maintaining a presence in lower-cost hubs, including Chennai, Belfast, and Warsaw.

This realignment extends to office locations. Citi intends to relocate its IT team currently based in Rutherford, New Jersey to a consolidated site in Jersey City next year. While the Rutherford office will continue to house other business functions, technology operations will cease at that location.

Industry analysts see these moves as part of efforts to overhaul Citi’s systems, which have long been under regulatory scrutiny.

Market reaction and outlook

Investors appear to be digesting the changes cautiously. Citi’s shares dipped 0.7% in early afternoon trading on Thursday, mirroring market trends, as the S&P 500 slid 1.1%. The bank’s stock has accumulated a 4.4% loss this year, reflecting ongoing challenges.

Citi’s IT transformation represents a decisive shift in strategy – one aimed at shoring up internal capabilities, reducing external risk, and appeasing regulators.

Execution will be key, however. The bank is expected to revamp its technology framework, but the ultimate test appears to be about whether these changes translate into a more resilient and efficient organisation.