AM I NEXT? NO LOVE -- LAYOFFS AT STATE STREET (UPDATED)

Am I Next? Executive Layoffs at State Street.

SEPTEMBER 14, 2019 — 250 IT WORKERS GONE IN BOSTON, MASSACHUSETTS, AUSTIN, TEXAS, AND ELSEWHERE

Continuing to eliminate employees in “high cost locations, the company announced the layoffs of 250 information technology employees.

According to a company spokesperson, “Today’s moves streamline our IT organization and removes unnecessary layers that get in the way of our overall success. With these changes we will ensure our culture of innovation is more readily focused on delivering against our strategic objectives in the near and long term.”

It also appears that the targeted headcount for a reduction in force is being quoted as 2,300 employees in “high cost locations” with 2,000 employees already terminated.

What really appears to be happening is a massive outsourcing of jobs to the company’s “hubs” located in low-cost countries such as China, India, and Poland. The company continues to automate previously manual operations, claiming that “Once you do that, you actually need fewer people in the mix, and you actually deliver better and higher-level services.”

JANUARY 19, 2018 — IT APPEARS WORSE THAN ORIGINALLY THOUGHT — 1,500 EMPLOYEES NOW TARGETED PLUS THE SENIOR EXECUTIVES PREVIOUSLY ANNOUNCED

In addition to the cuts in senior management, the company has announced that it will be laying off approximately 1,500 employees in “high-cost” locations.

It is believed that the recent acquisition of Charles River Development precedes an increase push to automate State Street’s front-end operations and integrate the back office functions. Something that is bound to reduce the headcount further.

According to newly-elevated CEO, Ronald O’Hanley, “While we have made progress on our technology transformation, much remains to be done and we are not satisfied with our recent performance. Structural costs are still too high and our automation efforts have not moved fast enough. The changes we are making will position us well to realize our three-year strategic vision to be the leading asset servicer, asset manager, and data insight provider to the owners and managers of the world’s capital.”

Original Post…

Boston, Massachusetts-based State Street Corporation, the multinational financial institution and the operator of the nation’s second oldest continuously operated bank, is continuing to execute “Project Beacon,” a multi-year cost-cutting campaign to reduce costs by increased automation. In addition, the company has announced that they will laying off 15% of its senior management which will include executive and senior Vice Presidents to remove unnecessary management layers and to simplify the organizational structure.

Management refuses to provide an exact number, but the speculation is that at least 100 senior employees are involved in order to generate the level of cost-savings needed to justify the reduction in force.

In a slide from an investor presentation at Goldman Sachs US Financial Services Conference …

Am I Next? Slide from State Street investor presentation.

There is little doubt that the company experienced poor performance in 2018 and a corresponding drop in their stock valuation. There is also the issue of the necessity to acquire Charles River Development for $2.4 billion to gain access to the company’s investment management and front-office automation tools and solutions.

Change is coming. There will always be a tomorrow, no matter how much you may try to ignore it. There are no guarantees in life, or promises for a bright future. Just because something bad hasn't happened yet, doesn't mean it won't. It can happen to anyone, anytime, anywhere. No one is guaranteed to wake up tomorrow and still have a job by evening. Are you now wondering, Am I Next?