Layoffs Hit IT Staff On Wall Street

Computerworld - In previous bear markets, brokers and administrative employees have typically been the first to get laid off by brokerages looking to cut costs.
But now that so many firms have met their goals of increasing bandwidth to provide clients with more online trading and advisory services, IT workers are starting to feel some of the pain.
For instance, New York-based industry stalwart Merrill Lynch & Co. last week announced plans to cut 109 jobs, including 80 IT positions in its London office. Meanwhile, Ameritrade Holding Corp. in Omaha confirmed last week that it will pare 170 customer service jobs on top of the 300 it eliminated in January.
A few days earlier, San Francisco-based Charles Schwab & Co. announced that it would slash up to 3,400 jobs before the end of the second quarter. In addition, reports have surfaced that Morgan Stanley Dean Witter & Co., The Bear, Stearns Cos. and Citigroup Inc. subsidiary Salomon Smith Barney Holdings Inc. are also considering plans to trim their head counts.
"Due to the continuing weak business environment affecting our industry, we continue to examine how to allocate resources, including staff and other expenses," said Merrill Lynch spokesman Joe Cohen.
Investing Changes
That means brokerages will no longer invest as much in network and storage capacity.
"Last year was about building the pipes in order to handle increased trading volume," said Richard Repetto, an analyst at Putnam Lovell Securities Inc. in New York. "Now the pipe is plenty big enough."
Brokerages are also beginning to invest in technologies aimed at helping them cut costs in other areas, such as call centers, Repetto said.
That's what's happening at Ameritrade, said Tim Butler, an analyst at Portland, Ore.-based Pacific Crest Securities Inc. Butler said Ameritrade recently introduced some internal efficiencies, such as real-time quotes, that mitigate the need for customers to call and ask for current stock prices.
"That has allowed [Ameritrade's] call volumes to fall down a little and allowed the company to get by with fewer employees," said Butler.
The automation hasn't hurt customer service, company officials claimed.
"Approximately 70% of inbound callers use our interactive voice response system," an Ameritrade spokesman said. He added that the company spent $100 million last year on technology, though he declined to say whether the current rounds of cost-cutting would have any impact on Ameritrade's IT budget this year.
Although Ameritrade and Charles Schwab rely heavily on electronic trading for their revenues, traditional brokers are also looking to trim their costs.
"Our business units around theworld have been asked to review current head counts and expenses, in light of current market conditions," said Morgan Stanley spokeswoman Judy Hitchen.
Hitchen declined to comment on whether and to what extent Morgan Stanley's IT staff would be affected.

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