22 March 2009
Outsourcing from the Perspective of a Multinational Firm
The United States financial environment still appears to be bleak especially with more sectors coming out in need of bailout. From the banking sector, the world has now witnessed it spread to other industries. It is a difficult time to be running a business in this great nation, regardless if the business is big or small. Those remaining companies, which are merely surviving or will be receiving government aid, will naturally restructure themselves to be leaner by selling off their non-core businesses, shutting down non-profitable divisions or transferring operations elsewhere to lower costs. The latter may be seen as a good business opportunity for countries like the Philippines to boost its outsourcing industry.
I remember reading for Module 2 where the Tata Consultancy Services acquired Citigroup Global Services and signed a 2.5 billion outsourcing contract last month. The Philippine outsourcing sector was also very positive that with JPMorgan Chase & Co.’s acquisition of Washington Mutual Inc. in September, the acquirer would soon aggressively offshore back more office jobs to the Philippines. However, tides seemed to have changed. In a report from Forbes, it said that Citigroup Chief Executive Vikram Pandit announced in a company town hall meeting in New York that Citigroup Inc. is laying off approximately 53,000 employees in the coming quarters. Together with that, the major bank will be cutting down its expenses by 19 percent in 2009 to $50 billion. The job cut will be worldwide but will be heavily concentrated in New York and London.
Despite the layoff being centered in New York and London, the Philippines might also be affected by this. According to the Philippine Inquirer, Citi-spokesperson Richard Tesvich said that the Asia-Pacific would also be able to feel the effects of the...