News: Citi may shift 9,500 jobs to India

(DNA 13/04/2007) New York - India would be one of the biggest gainers of Citigroup’s move to hand out pink slips to 17,000 employees, close small retail brokerage offices and shipping thousands of back-office jobs to cheaper overseas locations.

In addition to the 17,000 layoffs, the world’s biggest bank on Wednesday said it will ship 9,500 jobs to “lower-cost locations” with about two-thirds of those jobs being moved as the positions become vacant.

The cost-cutting effort launched under pressure from shareholders affects 8% of the bank’s work force of 327,000 employees. “17,000 plus 9,500 is the amount of jobs we’re really impacting,” Citi’s chief operating officer Robert Druskin, who spent the past three months devising the cost-cutting plan, told analysts on a conference call.

A Citigroup executive familiar with the restructuring plan told DNA Money that India would gain a major portion of the consumer banking jobs that were being relocated from high-cost New York, London and Hong Kong to low-wage countries.

“All our transaction processing back-office work is being done in India, Penang and Poland. Beyond customer services, we have been successfully outsourcing credit analysis, investment banking and equity research to India,” said the executive who did not want to be named.

“Citi’s consumer banking division still has back office work being done out of New York and London. These jobs could be moved to India.”

Citigroup chief Charles Prince had visited Mumbai barely three weeks ago and signaled that the bank was going to sharpen its focus on operations outside North America.

“We will continue to consolidate and simplify our back offices around the world,” Prince had said during his visit to Mumbai last month. “Traditionally India has been a beneficiary of that.”

According to Prince, India has been the single biggest driver of growth for Citigroup’s international operations. “High-growth markets like India and China will not be affected negatively by the restructuring,” a Citi executive told DNA Money. The US bank employs 22,000 people in India and they are unlikely to face cuts.

Citi’s international consumer operations netted $4.95 billion in revenue in the fourth quarter of 2006, against $7.96 billion realised from US consumer operations. Similarly, international operations in investment banking brought in $4.66 billion in revenues out of a total of $7.08 billion. The company’s net income declined 13% to $21.5 billion last year from $24.6 billion in 2005.

The “Wall Street Journal” reported that Citi had already handed out pink slips this week to more than 1,000 employees. About 7,300 of the layoffs will be in the US. The bank said it expects savings of $2.1 billion this year, $3.7 billion next year and $4.6 billion in 2009 from the job cuts.

“This is the beginning of a change in how we manage expenses in this company,” Prince said Wednesday about the cost-cutting. “You will see a more efficient, more tightly managed and more tough-minded Citigroup than you’ve seen in the past.”