Citigroup announced yesterday it was cutting 17,000 job cuts in an effort to save $2.1bn this year; this is a 5% cut in staff levels. Many of the cuts will be in support functions such as legal, human resources and finance. Most job cuts will be outside the US, of course - confirming the age old rule in investment banking that the further away you are from head office the more at risk is your job. While most press attention has been on the headline job cuts, the press notice also said:
More than 9,500 jobs will be moved to lower-cost locations, both domestically and internationally, with about two-thirds through attrition.
For that, read offshoring to India and other sites. In this, Citibank is simply catching up with the current practice of HSBC and other global banks. But a sign of the times, nonethless. According to Tara Ricks from City headhunters Joslin Rowe:
Citigroup already employs 19,000 people in India and is geared up to take on lots of extra people there.
Today's Financial Times warns that Citigroup’s bloat carries lessons for Barclays and others:
Here is a cautionary tale for Barclays and ABN Amro, the European banks that are negotiating a merger. Citigroup has discovered just how difficult it is to manage a megabank. Citigroup’s announcement of 17,000 job cuts in an effort to save $1.7bn this year was accompanied by some humble pie. Through mergers, the bank has accumulated excess layers of middle management and inefficient back and middle offices, which it is belatedly trying to eliminate.
One interesting twist - the high performers are not at risk. The Evening Standard reports:
Senior managers have been told to go through records and axe the poorest performers. Staff will learn within weeks whether they are to be paid off. ...Sources said anyone earning over £1 million would be safe because they were high performers. But anyone taking home less than that is in the line of fire.
Don't worry guys - your Ferrari and Fulham mansion are safe!