Citigroup cutting IT jobs, shifting some work offshore

Computerworld - Citigroup is cutting 11,000 jobs, many in IT, as part of a restructuring announced Wednesday.

The job cuts are part of a plan to save about $900 million through a variety of actions, including "increasing standardization and the use of automated processes," as well as streamlining the organizational structure.

The financial services plan, in its announcement today, said it will also cut costs by consolidating functions and moving certain job functions to "lower-cost locations."

Citigroup, which reported that it employed 266,000 workers at the end of last year, provided few details about its various actions, such as what benefits the standardization will bring. A spokesman did confirm, however, that moving some jobs lower cost locations meant offshore sites.

Of the total number of jobs being cut, about half appear to be in its operations and technology areas, according to the announcement.

Citigroup, unlike many firms announcing layoffs, was upfront about its decision to move work to so-called lower cost locations. That may be due to the company's longtime experience in using overseas services, including running its own offshore centers.

In 2008, for instance, Citigroup sold its IT subsidiary in India, Citi Technology Services Ltd., to Indian services firm Wipro Ltd., for $127 million.

"Citi is one of the most experienced banks for offshoring both banking operations and IT processes," said Phil Fersht, the CEO and head of research at HfS, an outsourcing research and advisory firm.

"This is a well-thought out strategy to shift much of their back office to low-cost locations where they have plenty of capacity to scale-up operations, notably India and the Philippines," Fersht said.

For the onshore operations, Citigroup's move will make it "leaner and more focused on the more complex IT work that requires frequent interaction with the business units," said Fersht.

The onshore Citigroup IT staff will also have to spend more time working with their offshore counterparts to manage projects, said Fersht.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov, or subscribe to Patrick's RSS feed . His e-mail address is pthibodeau@computerworld.com.

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