Citigroup Inc, the world’s largest financial services firm, has announced that it will eliminate 17,000 jobs or almost 5 per cent of its total global workforce and plans to move 9,500 positions to India and other low-cost locations. The decision has been taken with a view to cut its annual expenses by $4.6 billion in the next three years. The US-based banking giant also indicated that it’s restructuring strategy also include shutting down some offices and relocating employees. The move is Chief Executive Charles Prince’s latest effort to appease shareholders demanding faster growth and greater returns.
The group was forced to undertake restructuring plans to cuts costs and tries to boost profitability. The move aims to save around $2.1-billion this year and $4.6-billion by 2009. Citigroup executives were under immense pressure from shareholders to control the bank’s growing expenses, which alarmingly shot up 15 percent last year, twice the pace of revenue growth. Following this trend its shares have lagged those of other big banks.
Following the strategy, thousands of posts in New York City will be shifted to India or Poland, or smaller American cities like Buffalo, where the cost of doing business is lower. However, the attrition will not affect the balance in US as it plans to cut 60 percent of the cuts to take place outside the US. Even though the job losses, Citigroup will continue to increase its headcount, as the company hires staff in countries like Brazil, China, Russia and India.
The attrition plan was put on action after a three-month review led by Robert Druskin, who was appointed by chief executive Charles Prince with the remit to slash costs. Experts believe that if bank’s effort fails to make the bank more efficient to compete with the rival banks such as Bank of America, Goldman Sachs and others, broader strategic changes can also be expected. In addition to it, bank can undertake another round of cost-cutting as well if it does not consider the current job cuts sufficient.
