State Street takes 850 IT staff off the payroll

State Street takes 850 IT staff off the payroll

State Street is to sack 530 IT staff and transfer 320 other tech personnel to IBM and Wipro under an enterprise-wide technology modernisation programme.

The lay-offs are part of a major cost-cutting programme first announced by the US bank in December last year. The restructuring, which will incur up to $450 million in charges, comes as the company struggles to realise returns in a low interest rate environment.

At the time, the bank said it was prepared to make "sustained investments" in its technology platform, with a view to moving to lower-cost operating models through the development of private processing clouds. The first stage of this ambition was realised in June, when State Street rolled out a private cloud environment to provide clients with access to data and analysis in real time.

In step with these initiatives, the company is expanding its relationships with IBM and Wipro to "support components of its technology infrastructure and application maintenance and support systems".

State Street says 320 non-client facing IT positions will be transferred to IBM and Wipro, and a further 530 positions will be eliminated over the course of the next 12-18 months. The cuts will come from the bank's North American operations, removing approximately 20% of its 4000-strong IT workforce off the payroll.

James Phalen, executive vice president and head of global operations, technology and product development, at State Street says: "While making changes that impact a number of our employees is never easy, we believe that this move is a necessary step that will allow us to better deploy our resources in line with our core competencies, efficiently leverage the capabilities of our partners, and enable us to offer more sophisticated products and services to our clients."

He says State Street's internal IT resources will be more focused on research and development, including further use of private-clouds to develop more sophisticated, client-facing services.

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