Outsourcing: It Isn't Just for IT Jobs Anymore

Posted by Jill Hussein C., Brilliant at Breakfast at 9:02 AM on August 12, 2008.

If your job in any way involves generating paper, network packets, and talk, you are at risk of having it outsourced overseas. Because outsourcing isn't just for IT anymore:

Wall Street's losses are fast becoming India's gain. After outsourcing much of their back-office work to India, banks are now exporting data-intensive jobs from higher up the food chain to cities that cost less than New York, London and Hong Kong, either at their own offices or to third parties.

Bank executives call this shift "knowledge process outsourcing," "off-shoring" or "high-value outsourcing." It is affecting just about everyone, including Goldman Sachs, Morgan Stanley, JPMorgan, Credit Suisse and Citibank -- to name a few.

The jobs most affected so far are those with grueling hours, traditionally done by fresh-faced business school graduates -- research associates and junior bankers on deal-making teams -- paid in the low to mid six figures.

Cost-cutting in New York and London has already been brutal thus far this year, and there is more to come in the next few months. New York City financial firms expect to hand out some $18 billion less in pay and benefits this year than 2007, the largest one-year drop ever. Over all, United States banks will cut 200,000 employees by 2009, the banking consultancy Celent said in April.

The work these bankers were doing is not necessarily going away, though. Instead, jobs are popping up in places like India and Eastern Europe, often where healthier local markets exist.

And cheaper labor, which is the real motivation behind outsourcing. It shouldn't come as a surprise that the very same bankers who got us into this mess are looking to shore up their own jobs by jettisoning the grunts in the trenches -- even if those grunts were making six figures. As the hidden motivations of those behind the financial mess in this country become clear (most notably the systematic and deliberate elimination of the middle class), I have to wonder if jettisoning those six-figure junior level employees was part of the plan all along.

But if you really want to see the back of your own head explode, read this part of the same article:

Press officers for most banks asked not to be quoted or argued over semantics. For example, one spokesman said his bank's fast-growing India support operations are not an outsourcing facility, but a "center of excellence"; another argued that large cost cuts at his bank's New York and London headquarters were really "re-engineering" so the bank should not be included in such an article.

"Center of excellence." If the workers in India are so excellent, then why don't you want to pay them what you would pay workers here? For that matter, if they're so excellent, shouldn't you be paying them MORE?

Tagged as: india, banks, wall street, outsourcing, american business, it

Jill Hussein C. blogs at Brilliant at Breakfast.