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.
Think about that bail out that recently happened. Now think again..how much of that Money left the country? And how many more jobs will be leaving? And how much will the taxpayer have paid these companies to remove tax revenue from the state? but back to NYC in particular:
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.
So now the "entry level" b-school grad job is going away? Pray tell how will you get further up the ranks if the entryway is gone? But enough of that, did someone say $18 billion less in pay? Do you know what that's going to cost NYC? NYS? Did someone say 200,000 financial sector jobs that pay upwards of six figures, will be going away? It's no wonder that..
Many investment banks, including Morgan Stanley, Goldman Sachs, Merrill Lynch and Citigroup, would not make executives available to discuss the topic.
You don't say? If I was getting tax write offs and bail outs from the Fed as well as having the major political parties in my pocket, I wouldn't talk on record either.
But you must like the joke:
In the future, executives in India like to joke, the only function for highly paid bankers in New York or London will be to greet clients and shake hands when the deals close.
So when these "high value jobs" leave NY leaving a few highly paid "client greeters" in NYC just what will the tax base of NY look like? NYC has already lost upwards of 70% of it's finance sector revenues and movie prices can only go so high. Apple Stores will only bring in but so much. Fashion avenue is only going to bring in so much. The super rich buying from each other will only do so much. Is there an impending collapse here? We shall see.
