April 23 (Bloomberg) -- Barclays Plc plans to shift 10,800 jobs to India and other low-wage countries, betting reduced costs will help win support for its acquisition of ABN Amro Holdings NV, the world's largest financial services takeover.
Barclays, Britain's third-largest bank, will also slash about 12,800 jobs to pare expenses by 2.8 billion euros ($3.8 billion), the banks said in a statement today. Barclays, based in London, today agreed to buy ABN Amro for 67 billion euros.
Salaries in insurance, banking and finance in India may rise 16.5 percent this year, driving the fastest wage growth in Asia, according to Hewitt Associates Inc. Aviva Plc, HSBC Holdings Plc and Standard Chartered Plc have hired back-office staff in India, where a financial analyst costs as little as a quarter of counterparts in Europe, Paul Abraham, managing director of ABN's global support unit, said last month.
``Despite the high salary increases year-on-year, Hewitt research suggests that talent cost arbitrage vis-a-vis the U.S. still exists,'' said Nishchae Suri, head of Asia Pacific analytics consulting, at Hewitt Associates. ``India has a vast talent pool that is of superior quality.''
Barclays Chief Executive Officer John Varley said today the bank will move workers to ``low-cost'' locations including India, without elaborating. ABN Amro, which employs about 4,000 back- office workers in six offices in Mumbai, Chennai and New Delhi, plans to hire as many as 2,000 more people by March, Lars Gustavsson, global head of the services unit, said on March 15.
India to Brazil
Barclays's acquisition of Amsterdam-based ABN Amro will create a bank with about 217,000 employees and 47 million customers stretching from India to Brazil. Barclays plans to slash almost 6 percent of the combined workforce, excluding Chicago-based LaSalle Bank. In a related deal today, ABN Amro agreed to sell LaSalle to Bank of America Corp.
``Part of the expected staff reduction will be through establishing shared services and offshoring those positions to low-cost locations, such as India where new staff will be recruited at ABN Amro's existing'' operations, the banks said in the statement. ``The reduction in staff is a necessary part of the envisaged synergies from the combination of the two banks.''
The Barclays and ABN Amro combine will have to compete for talent in the world's second-most populous nation.
Standard Chartered has about 5,100 employees in India that serve its operations across 56 countries and plans to double the number in three years.
HSBC plans to increase its workforce in India to 30,000 next year from 22,000, Naina Lal Kidwai, the bank's chief executive in the country, said in October. About 12,000 are employed at a customer-contact center, 3,000 at an information technology center and 7,000 to support its branches in India.
Hiring Talent
The world's biggest companies are hiring more people in Asia's fourth-largest economy because Indian professionals, especially those in middle and junior management roles, still earn less than a fifth of their peers in the U.S. and the U.K., Sharad Vishvanath of Hewitt Associates said in March.
The Indian School of Business, based in the southern city of Hyderabad, said salary offers from companies in India rose at a faster pace this year than wages paid by overseas companies.
The institute said 414 of its students this year were hired by overseas financial services companies including Citigroup Inc. and Goldman Sachs Group Inc. and local employers such as Infosys Technologies Ltd.
The students got an average overseas salary of $135,000 a year in 2007, compared with $120,700 in 2006. The average salary offered by companies in India rose to 1.5 million rupees ($35,971), compared with 1.18 million rupees last year.
`War for Talent'
``The war for talent is becoming increasingly fierce in India,'' said Hewitt Associates' Suri. ``India will still maintain the cost advantage over its Western counterparts.''
India's $854 billion economy has grown an average 8.6 percent since 2003, making it the fastest accelerating major economy in the world after China. The country turns out four times the number of technical workers produced by the U.S., according to a study by New Delhi-based National Association of Software and Service Companies and McLean, Virginia-based Booz Allen Hamilton Inc.
``If a company is looking to hire a large workforce, say a thousand or more, the choices are few. It has to look at India or China,'' E. Balaji, chief operating officer, Ma Foi Consultants Ltd., said in an interview earlier this month. ``India's transparent legal system and its workers' fluency in English often give the country an edge.''
India may add 1 million jobs this year, compared with 850,000 in 2006, Balaji said. The banking and finance sector will account for the biggest chunk, about 16 percent, he said.
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