UK bank Barclays will move 10,800 jobs to India following the recently-announced merger with ABN Amro. The offshoring move is part of an effort to generate billions of euros in annual savings.
Barclays announced last week that it planned to buy Dutch bank ABN Amro for about €67 billion (NZ$122 billion), creating a European banking giant with more than 47 million customers, including 1.4 million businesses.
The banks hope to boost their profits by slashing annual costs by an estimated €2.8 billion, or 10%, by 2010, mostly through job reductions, outsourcing and IT savings, they say.
More than half the savings, or 57%, will come from combining some of the banks’ service operations and moving them to India and other low-cost locations, according to Barclays.
That will mean a net reduction of 12,800 jobs, and 10,800 positions moved elsewhere, from a combined workforce of 217,000. The cuts will be made over three years through redundancies and attrition, Barclays says. The bank acknowledges the “difficult consequences” for affected workers and says it will need to negotiate the layoffs with local unions and regulators.
Savings from telecoms and IT will amount to about 29% of the total, or €812 million, including hardware, software and development, the banks say. They plan to consolidate their datacentres and IT support networks and use ABN Amro’s trade and payments back office system.Both companies use financial software from SAP, according to SAP’s website, which could make the integration process less complicated.
The companies will have to spend first in order to achieve the savings: They expect pre-tax integration costs of €3.6 billion between now and 2010 to achieve the “synergy benefits” of the deal.
The move is the latest of several outsourcing projects by European banks. ABN Amro had already announced in 2005 that it would cut 1,500 jobs and outsource its IT operations through deals worth €1.8 billion over five years. Most of the business went to IBM, with smaller deals for Accenture and the Indian companies Infosys, Tata and Patni.
In December, ING Group signed deals worth €750 million over seven years to provide telephony and PC support services for its 53,000 employees in Europe. Those deals went to Royal KPN, Getronics, Atos Origin and Accenture.