January 17, 2020
State Street expects to eliminate 750 jobs in so-called “high-cost” locations this year, executives said Friday. Last year, 3,400 positions were cut.
The headcount reductions are part of an overall plan to lower spending by about 1% for 2020, officials told analysts on the company’s fourth-quarter earnings call. In all, the firm reported $8.9 billion in expenses last year, down 1% from 2018.
“We see a path to continued and ongoing expense management, certainly through 2020,” CEO Ron O’Hanley said on the call. The company has a lot more to do to implement automation and process improvements across the organization, he said.
State Street is working to moderate its technology spending. However, the firm intends to continue investing in high-growth areas, such as its Charles River Development front-office technology business.
State Street took a $110 million “repositioning charge” in the fourth quarter associated with its 2020 plans. Of that, $98 million is related to severance and employee expenses, the earnings report shows. The remaining $12 million is tied to real estate.
Global headcount at the Boston-based custodian has dropped for four straight quarters. Before that, staff count rose for several years, despite rounds of layoffs. While the number of employees based in high-cost locations dropped by 3,400 during 2019, the firm apparently staffed up elsewhere. Firmwide headcount fell by 1,000, the company noted in its press release.
The 3,400 job cuts were more than double the firm’s initial projections. Last January, the company’s cost-cutting plan indicated that 1,500 such positions would be eliminated. And just a month ago, the firm said it was on track to cut 2,300 jobs in 2019.
The firm has eliminated positions in the United States, United Kingdom and other expensive locales, and shifted some of those roles to operating centers in China, India, Poland and elsewhere, executives have said.
Additional job cuts are expected to be a major force in driving down the firm’s gross expenses by up to 5% in 2020, CFO Eric Aboaf said on Friday’s call. But the company also expects to invest about 3% to 4% of that savings into Charles River, technology infrastructure, and bringing in new clients or business.
January 17, 2020