Tuesday, July 29

Lehman BPO shows door to 180

NEW DELHI: Lehman Brothers’ captive back-office unit in Mumbai is set to hand pink slips to over one-fourth of its employees. Lehman Brothers Financial Services (India), which employs around 700 people at its captive unit at Powai has asked about 180 employees to leave. “In the second quarter, Lehman Brothers, globally, announced a $2.8-billion net loss due to bad debt. Some processing related to this bad debt was being done at Mumbai, which has been affected. Moreover, it’s expected that Lehman will announce a further write-off of about 2.5-billion in Q3 and declare some assets for sale. All this will have an impact on the Mumbai unit,” said an IT-BPO industry expert. When contacted, Lehman Brothers India senior vice-president and HR head Awdhesh Krishna said, “This is not true. No one has been sacked at the back-office unit.” The captive unit provides technology support and financial process outsourcing services to the parent company. Earlier this year, Lehman Brothers lost senior executives like investment banking senior VP Charandeep Singh and mortgage capital senior VP Sameer Chadha to rivals. Mr Chadha quit to join Barclays where he is heading operations of its upcoming back-office unit in India. Captives are losing their sheen, with rising operational costs and higher-than-industry attrition rates. Embroiled in the global financial crisis, several financial services firms have decided to sell their captives. Citigroup’s captive has been on the block since last year.

Recently, Fidelity Management and Research Company India said it will shut down its Gurgaon offshoring unit by September-end in a bid to consolidate its operations. The Gurgaon facility employs 350 people and provides back-office IT support to the US-based Fidelity Management and Research Corporation. Insurance major Aviva recently sold its captive BPO unit to Mumbai-based WNS Global Services for $228 million. “The trend among financial services companies streamlining operations at their captives will gain ground as these companies are beginning to accept outsourcing all the work to third-party service providers. It would be IT jobs at these captives, which are largely restricted to support work that would be the first ones to go,” said outsourcing advisory firm Tholons CEO Avinash Vashistha. Banks, traditionally known to be wary of outsourcing to third-party outsourcing vendors due to data confidentiality, have taken to outsourcing as pressures mount to cut costs. A number of banks in relatively new outsourcing markets like Australia, for instance, have recently stepped up outsourcing efforts. National Australia Bank recently announced that it will outsource 500 jobs to vendors in India. New Zealand’s largest bank ANZ National and Australian bank Westpac, too, have announced plans to increase outsourcing to India

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