US financial services companies relocate

US financial-services companies plan to transfer 500,000 jobs out of the country, but Ireland is placed only ninth in a list of the top ten relocation countries.

A survey by AT Kearney, a management-consulting subsidiary of Electronic Data Systems Corp, found that the trend of relocating jobs out of the US is accelerating and US financial-services companies plan to transfer 500,000 jobs, or 8% of total industry employment, to foreign countries over the next five years.

Up to now, offshore job transfers have primarily focused on back-office functions like the massive

MBNA credit card centre in Carrick-on-Shannon where 470 people are employed in MBNA’s European operations centre focussing on administration, security facilities, operations, finance, personnel and telemarketing.

Ireland has benefited from this type of job transfer with data entry, transaction processing and call centres all being established here.

The latest paradigm shows the job shift is involving a wider range of professional lines of work.

These lines include financial analysis, regulatory reporting, accounting and graphic design, according to the AT Kearney survey.

The reason for relocation remains the basic business need of cost-cutting.

However, despite the findings of an earlier survey this year by AT Kearney that Ireland ranks as the country most influenced by globalisation, the country is situated down the list of possible locations for this type of foreign direct investment (FDI).

The study estimates an annual cost savings of close to $30 billion for the financial-services industry, as it proceeds with the massive switching of employment out of the US.

The survey shows that a call-centre employee earns about $20,000 in the US, but closer to $2,500 in India.

“A Wall Street researcher with a college business degree and a few years experience can earn as much as $250,000, compared with $20,000 in India,” the Wall Street Journal reported this week.

The AT Kearney study was based on interviews in February and March with senior executives from 100 of the largest US banks, brokerage firms, insurance companies and mutual funds.

Corporate chiefs list India as the most attractive country overall for offshore business processing, followed by China, the Philippines, Canada, the Czech Republic, Mexico, Australia, Brazil, Ireland, Hungary and Russia.

India is Ireland’s main competitor for this type of FDI, with a ready pool of well-educated English-speaking graduates able to accept far lower wages than Irish workers because of the high cost of living in Ireland compared with India.

Among the most aggressive exporters of US jobs are General Electric, GE Capital Corp. unit, Citigroup Inc. and American Express Co.

GE Capital has nearly 15,000 employees in India already and plans to add 5,000 by the end of this year, said Stefan Spohr, one of the study’s authors.

AT Kearney has itself moved 50 jobs in creative-presentation services to India.