HSBC today said it will slash as many as 50,000 jobs and shrink its investment bank by a third to combat sluggish growth across its sprawling empire. Half of job cuts will be in Brazil and Turkey, where the bank will sell its businesses.
But the story is different in India. The bank said that the impact here will be minimal, and that more jobs might be headed this way. "It is too early to speak of the impact (of the global cost cutting measures). If anything, it will be minimal in nature here. It could also be positive as Asia has been identified as a focus market and moreover India is a priority market for us," an HSBC India official said.
Chief Executive Stuart Gulliver has made it his mission to boost profits since taking the helm of Europe's largest bank by assets in 2011 but his efforts have so far been foiled by high compliance costs, fines and low interest rates. The bank said it will cut the staffing in investment banking by a third in this effort to improve efficiencies, which is aimed at cutting costs by up to $5 billion by 2017. European rivals including Barclays, RBS, UBS and Deutsche Bank have axed thousands of jobs, but many are facing fresh calls for more radical cuts in investment banking given tough operating conditions.
The bank now plans to increase its software engineering development and back office work in India and China as part of its move to consolidate this vertical. This move is expected to save up to $525 million over the next two years. It could not be ascertained what the current share of India in the bank's overall offshoring work is.
The bank in an investor presentation said that it will increase software engineering carried out in India and China to 75 per cent by 2017 from the present 50 per cent, which could help it save up to $525 million. "Asia is expected to show high growth and become the centre of global trade over the next decade. We recognise that the world has changed and we need to change with it," group chief executive Stuart Gulliver said.
According to estimates, out of the 32,000 employees of HSBC in India, as many as over 27,000 are employed in the back offices and development centres spread across Pune, Hyderabad, Vishakapatnam, Kolkata, Bangalore and Delhi.
It has another 5,000 employees in the banking, asset management and insurance space in the country. According to the official, the bank employs only under 20 in the equity capital markets and i-banking divisions and an equal number at its debt capital markets division in the country.
Last year the bank hired 1,000 employees in India, taking the total number to 32,000, which was the second highest after England.
In an investor presentation, the bank identified India among focus areas where it intends to grow, along with others countries like Australia, Canada, Egypt and Taiwan.Suggest a correction