Wachovia tells 3,000 employees move will bring uncertain number of layoffs
RICK ROTHACKER
Staff Writer
Wachovia Corp. will outsource some technology work to as many as three outside companies, a move that will cost an undisclosed number of jobs, the company told employees in conference calls Tuesday.
The Charlotte company has narrowed its list of potential offshoring partners to India-based Infosys and two U.S.-based companies -- IBM Corp. and Cognizant, Wachovia spokeswoman Christy Phillips confirmed.
The company has made no decision on what companies it will use, but the work will be done in India, she said.
Wachovia has identified technology functions that can be handled by vendors, but hasn't started shifting the work yet, she said.
Offshoring technology operations is an increasingly prevalent practice in the financial services industry that has caused worries about the loss of U.S. white-collar jobs.
The nation's No. 4 bank by buttets disclosed in January that it was considering outsourcing and offshoring as part of an efficiency initiative to trim annual costs by $1 billion by 2007.
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Wachovia has said the companywide effort, which includes other cost-cutting, will eliminate up to 4,000 jobs.
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In the outsourcing initiative, Phillips said, some positions would be cut. "However, it's too early to provide specific details around those reductions," she said.
Wachovia technology workers have been worried about their jobs, and Tuesday's conference calls did little to alleviate concerns. Contractors who currently work with the company also could lose work.
"I'm sure this will impact jobs in Charlotte," said one employee who spoke on condition of anonymity. "We're bummed."
Phillips said the company has worked to keep employees informed. For those whose jobs are affected, Wachovia will provide severance, training, outplacement services and the opportunity to post for other jobs, she said.
Besides reducing costs, the company also is looking to get "better value and higher quality," she said.
Wachovia has significant technology operations in uptown Charlotte and the University area. Overall, the company employs about 19,000 in the city.
Phillips said conference calls were held for about 3,000 employees in the Chief Information Officer division, which has workers throughout the company's operations.
The companies being considered by Wachovia are among the world's largest offshore operators.
Infosys, with $1.5 billion in sales last year, is the second-largest Indian outsourcing provider, according to the National buttociation of Software and Service Companies, the industry's leading trade group in India. The company is based in Bangalore, in southern India, and has about 36,800 workers, according to filings with U.S. regulators.
The trade group doesn't include U.S. companies, but says Cognizant would rank fifth, based on sales. The New Jersey company has about 15,300 workers, three-quarters of them in India, according to federal filings.
Wachovia wouldn't be the first Charlotte bank to offshore technology work. Bank of America Corp. began shifting some positions to a subsidiary in India about three years ago. That offshoring began with computer work, and market research and other tasks have since been added. -- STAFF WRITER STELLA M.
