Econintersect: State Street Corp. announced Monday (July 19) that it would cut 1,400 positions by the end of 2011. This amounts to approximately a 5% work force reduction. The heaviest cuts are being taken in IT (information technology), with more than 20% being cut. According to Securities Technology Monitor, 850 technology positions will be cut from approximately 4,000 worldwide, but almost all of the cuts will come in North America. Some of the positions cut (320) will see employees transferred to IT service providers IBM and to Wipro Technologies. Wipro is based in India and IBM is based in the U.S., although it is estimated that at least 75% of IBM employees are located outside the U.S.From Securities Technology Monitor:
…..State Street said it expected to recognize restructuring costs of approximately $400 million to $450 million over four years, beginning in the fourth quarter of 2010. It expects “slight pre-tax cost savings” in 2011. By 2014, the annual savings should be roughly $600 million.
The State Street announcement comes amidst numerous reports of shake ups in IT operations for financial firms. According to Reuters, employment consulting firm Challenger, Gray & Christmas said the financial sector has cut 11,413 positions through May. This is 21% more than the corresponding period in 2010.
There will be consolidation of IT services as more companies move into services provided in cloud computing, as discussed by Wall Street & Technology. And state government cutbacks are also likely to produce significant job IT losses. Some of the recent furloughs due to the Minnesota state government shutdown could become permanent position cuts.
The federal government might also be a majot contributor to IT workforce reduction. The Times of India reports:
The federal government plans to shut 40% of its computer centres over the next four years to reduce its hefty technology budget and modernize the way it uses computers to manage data and provide services to citizens.
Computer centres typically do not employ many people to tend the machines, but analysts estimate that tens of thousands of jobs will most likely be eliminated by this decision.
The savings, analysts say, will translate into billions of dollars a year and acres of freed-up real estate.
Some companies announcing headcount reductions recently include Goldman Sachs (1,000), Co-operative Financial Services (670), Nokia (7,000, mostly Europe), MySpace (500) and several outsourcing deals mentioned by Computer World.
Well, not quite Armageddon, but a 21% increase in IT job losses in 2011 is certainly not nirvana either.