HSBC SET TO OFFSHORE ALL IT JOBS

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There have been whispers for weeks that HSBC's apparent "hone it down" re-structuring strategy, could mean more offshoring. Today sees an announcement that HSBC alerted its 3000 IT staff back in June that it plans to create a centralised European IT function from January next year. But failure to consult with the financial unions, namely UNIFI, means that the threat of strike action is imminent.

NOA comment: When HSBC announced in October 03 that 4000 jobs (call centre and back office) were to be offshored to India, many believed that this was a one-off strategic move. But today's statement that these 3000 IT jobs are to go, could paint a very different picture for the future of HSBC. The most extreme scenario is that HSBC might be planning to move towards a "hollow organisation" structure, relying primarily on outsourcing for their back end business processes and gradually switching the majority of customer service to the Internet and call centres based in appropriate global locations...

The NOA does not know the minutiae of the deal, but in similar outsourcing cases, organisations have to be wary of the following:

* Consulting the unions: the right balance in outsourcing deals of this size can be very difficult to achieve. Liaison with the unions is paramount and you would think that HSBC, judging from past experience and
the problems that other financial institutions have encountered, would have drafted them in at the earliest possible opportunity
* Alienating current staff: it's likely that staff morale at HSBC is running at a low. If the 3000 strong IT department, can be offshored, they may all be fearful of their jobs - HSBC will have to knuckle down, hone its HR and communications policy and ensure that the right messages are communicated to the right people. Honesty is usually the best policy - covering it up only causes bad feeling
* Pensions: in the HSBC case, about a third of the staff involved are over 50 years old - what happens to their pensions if their jobs are pushed overseas? Pensions is a very crucial and tricky area in outsourcing. There is no set legislation as yet on this and the NOA is currently laying the ground stone for initiating a government lobbying campaign on this issue
* Alienating customers: offshoring is still a contentious issue and there has been research to show that it can have an effect on customers' decision to select a bank. HSBC will have to ensure that blips in customer service are minimal and any problems with strike action are ironed out straight away

NOA warns: HSBC will have to be very careful how this is handled. According to a UNIFI spokesperson earlier this year, HSBC apparently had to bring back a whole swathe of call centre jobs it relocated to India, back on-shore. If offshoring doesn't work out, it can be a very costly and difficult process to sort out. These are IT jobs, but as in the call centre space, the right processes and operations must be in place

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