Citigroup is planning to cut its reliance on external contractors by 30% while simultaneously expanding its in-house technology team. The move is aimed at strengthening internal capabilities, enhancing regulatory compliance, and addressing concerns over data governance and risk management.

Currently, half of Citigroup’s IT workforce consists of external contractors. However, the bank now intends to reduce this figure to just 20% by replacing contractors with full-time employees. As part of this transition, Citigroup plans to grow its internal IT staff from 48,000 in 2024 to 50,000 by the end of 2025.

The company is also restructuring its IT operations by consolidating teams and moving them from Rutherford, New Jersey, to a new facility in Jersey City. This realignment is part of Citigroup’s broader strategy to improve operational efficiency and strengthen its technology infrastructure.

Citigroup's leadership has emphasized the need for a stronger internal IT framework to support business growth and improve security. “Citi is growing our internal technology capabilities to support our strategy to improve safety and soundness, enable revenue growth and drive efficiencies,” the company told Reuters.

The decision aligns with ongoing regulatory challenges the bank has faced. In 2024, Citigroup was fined $136 million due to deficiencies in data governance. Additionally, a $22.9 million fraud incident involving external contractors raised concerns about the risks associated with heavy reliance on outsourcing. By expanding its internal workforce, Citigroup aims to mitigate such risks and ensure compliance with stringent regulatory requirements.

The financial sector is under increasing scrutiny regarding data security and risk management, and Citigroup’s latest decision underscores the bank’s commitment to strengthening oversight in these areas. The reliance on contractors has long been viewed as a vulnerability, particularly after the fraud incident that exposed gaps in vendor management.

By reducing contractor dependency, Citigroup seeks to tighten control over critical technology functions, thereby improving security and operational resilience. This shift reflects a broader industry trend where financial institutions are prioritizing internal expertise over third-party outsourcing to address regulatory and cybersecurity concerns.

While the decision to cut 30% of IT contractors may result in job losses among external workers, Citigroup’s investment in internal teams is expected to create new opportunities for full-time employees. The bank's focus on expanding its internal workforce signals long-term stability and a strategic move toward self-reliance in IT operations.

As one of the largest financial institutions globally, Citigroup’s decision could influence hiring trends across the banking sector. Other institutions facing similar regulatory pressures may also look to reduce outsourcing and prioritize in-house talent development.

Looking ahead, Citigroup's approach will serve as a test case for balancing cost efficiencies, regulatory compliance, and technological advancements. With plans to have 50,000 internal IT employees by the end of 2025, the bank is positioning itself to navigate the evolving financial and regulatory landscape with greater control and security.