Wall Street to shift more staff out of pricey cities: consultant
NEW YORK (Reuters) - Over the next decade, Wall Street banks will cut in half the proportion of support staff they have in pricey cities like New York and London and shift those workers to less expensive cities in the developing world, according to a projection by consulting firm Johnson Associates Inc.
Today, about half of the employees who handle back-office functions and operations at investment banks work in high-cost locations, Johnson Associates said in a March report.
By 2024, just 25 percent of those workers will remain in expensive cities, while the proportion in the developing world will jump from 25 percent to 50 percent.
"The industry is under huge cost pressures and that's one way to save money," said Alan Johnson, who heads the firm and helps large financial companies develop compensation plans. "As you look at the cost differentials, and with technology making it easier to do things from remote locations, firms plan to have fewer people here."
Big banks have been shifting support staff to lower-cost cities for some time but have gotten more aggressive in recent years because of profit pressures.
In addition to cities in the developing world like Bangalore, India, and Singapore, the industry has also moved workers to lower cost cities within the United States. Goldman Sachs Group Inc (GS.N) has been adding staff to operations in Salt Lake City and Dallas in recent years, while Morgan Stanley (MS.N) has a large facility in Baltimore.
Johnson said staff in those areas could also grow.