JPMorgan Chase & Co. plans to double its head count in India in the next couple of years.
The New York company expects to hire 4,500 recent graduates in India by the end of 2007. They will work in Bombay and Bangalore and process much of JPMorgan Chase's foreign exchange and credit derivatives contracts, a spokesman confirmed Monday. JPMorgan Chase expects that 30% of its investment bank's operations jobs - about 3,000 employees - will be in India by 2007.
The accounting firm PricewaterhouseCoopers reported in September that U.S. financial services companies looking to cut costs and provide global service around the clock are sharply increasing their use of offshoring.
Paul Horowitz, a partner at PricewaterhouseCoopers and the U.S. leader of its technology and outsourcing services, said Monday that "the trend of offshoring is just continuing, doubly so in investment banking."
Financial companies have started offshoring more "knowledge-based functions," such as financial analysis, modeling, and research, Mr. Horowitz said. In the past it was more common to offshore call center operations and other less demanding tasks, he said.
"You have the number crunching, number churning going off to India," he said. "It really allows the analysts" - in the United States or other primary markets - "to focus more on the analysis."
Some American banks have long histories offshore. For example, Citigroup Inc. has been in India for a century, and has done IT development there for more than 20 years.
A Citi spokeswoman said Monday that she could not say how many offshore employees it has.
Bank of America Corp. has an Indian subsidiary, Continuum, with operations in Bombay and Hyderabad that provides back-office processing for customers of B of A's global commercial and investment banks. The Charlotte company expects Continuum to have about 1,500 employees by yearend.
Wells Fargo & Co. still has the vast majority of its operations in the United States. But the San Francisco banking company has a corporate trust office in London and operations in Canada and Puerto Rico that support Wells Fargo Finance, and it has hired Indian companies for a few technology projects, according to spokeswoman Janis Smith. "No U.S. positions for full-time employees have been affected," she said.
Last week Wachovia Corp. signed a seven-year contract with a former General Electric Co. unit, Genpact of Delhi, to handle some of its back-office processing. Earlier this year Wachovia said it aimed to cut its expenses by $1 billion by 2007, in large part by outsourcing up to 4,000 jobs.
Other banking companies have taken a variety of approaches. PricewaterhouseCoopers said some large global banks, such as HSBC, offshore only to entities they own.
In September, ABN Amro Holding NV announced a five-year, $2.2 billion plan to outsource much of its information technology work to five companies, including three from India, with a long-term goal of cutting its annual IT budget by 10%. That work is to begin in 2007.
Madhavi Mantha, a senior analyst at the Boston market research firm Celent Communications LLC, said JPMorgan Chase executives have demonstrated they can manage an offshore work force effectively, and "now they're increasingly confident in their ability to roll that out to a broader range of functions."
