State Street Corp. reduced its headcount by 3,400 employees last year as part of a cost savings initiative, more than doubling the number of job cuts it had anticipated at the outset of 2019.
The company (NYSE: STT) revealed the figure Friday morning alongside its fourth-quarter earnings. Its stock price was up by 5% in early trading to more than $85 per share, as the financial services giant reported a slight year-over-year increase in revenue and a jump in net income of over 60%.
A year ago, the firm had announced that it planned to cut approximately 1,500 employees. State Street has struggled to grow revenue as it faces intense pricing pressure in what has long been its core business, custody banking. The job cuts came at what State Street considers high-cost locations, including its Boston headquarters. The layoffs included a significant number of senior managers.
But as the year progressed, State Street raised the target as revenue continued to fall year-over-year. In July, it said it planned to cut 2,300 jobs at high-cost locations in 2019. By October, it had reduced headcount by more than 2,700 employees.
Ultimately, the figure ended up at 3,400 workers, or 8.5% of its global workforce at the start of 2019. The company did not break out where the job cuts occurred.
More layoffs appear to be in the offing. In a presentation to investors last month, State Street executives said they plan to “optimize” the company's information technology workforce further in 2020, including by increasing the percentage of IT jobs that are located offshore and reducing its footprint across four to five high-cost locations.
In all, the company aims to save $150 million to $200 million this year on IT costs. It realized $415 million in savings through last year’s cost-cutting initiative, which was broader.
Even with significantly lower expenses, State Street’s net income available to common shareholders dropped by more than 10% in 2019, to $2.15 billion.
RESIDENTIAL REAL ESTATE
This $37M mansion was once owned by the richest man on the Titanic
COMMERCIAL REAL ESTATE
Encore Boston Harbor is down 200 employees amid 'rightsizing' efforts
An exterior view of Encore Boston Harbor from the Mystic River by day.
HIRING IN ACCOUNTING
Managing Director of Investment Banking - Own a Franchise
Franchise Career Advisors
State Street has been investing in its workforce in select areas. It’s been building up its headcount in China, India and Poland for years, where workers are paid less. It’s also made hundreds of new hires at Charles River Development, the Burlington-based investment software provider it acquired in 2018 that is a key part of its growth strategy moving forward.
In a statement Friday, State Street Chairman and CEO Ron O’Hanley said he sees the company as making progress. He pinned some of its difficulties last year on market weakness.
“We acted aggressively to offset these headwinds, improve value to clients, stabilize revenues and reduce expenses,” he said. “While we have made measurable progress towards our revenue and cost savings targets, we have more to do to improve margins and reach our medium-term goals by optimizing our technology infrastructure and client-centered revenue growth as key drivers. We are confident in the trajectory of our business and focused on continuing to improve our performance."