Sydney drops 4.7% over last six months - what do you think is happening?

It's quite reasonable considering that their share prices are down and they need to increase their profit margins. Employees are always the first to go.

 

That is spot on...they will not be able to grow profits via organic growth as we are coming off major housing ramp ups in Sydney and Victoria where the majors HO are based. These two states also have over 60% of the population of Australia.

As you said the only way to increase profits and thus increase share prices is to reduce costs ..most of this is in headcount.

 

You would think so but it doesnt quite work that way

You see, in terms of IT, the banks have been outsourced for a very long time. The inidian consulting companies like HCL have had their grip on the main banks and that is nothing new.

In terms of other areas you can't just outsource your risk, actuarial or marketing department or you will be coming out of a hole and going into a well.

If you mean call-centre staff, most of them are not even full timers and call centres have the highest turn over any way.

I think until you have valid information on something actually happening it would be best not to speculate.

 

It might not be the bank....the Big 4 are already outsourcing things like Audit services. The flow on is huge. BPO is the next Big area....some banks are already heading down this path anyway.

The pressure is on to reduce labor costs. They are hiring people from overseas who have come here and paying them less. So people in Marketing who were earning say 120k will now be on 90k. Do you see the picture...it is not only offshore but also on shore. They are also looking at a blended model where core people stay onshore but look to send the repetitive tasks offshore.

 

Look at property valuations, do you know any banks that does this internally anymore?
Not just outsourcing, they will cut down on staff across the board where they can to improve their bottom line.

Look at companies around the world, same thing is happening.

 

?? Bpo has been around for a while. Its a fairly mature area compared to a lot of other IT related outsourcing like cloud managed services..
I have not seen strong evidence of companies hiring foreign workers onshore so they can pay them less than what a resident would get.
The blended model you refer to is a common model used..i agree. I was involved in one at suncorp bank a while back where they 'de-risked' processes and made them more commoditised so they can ship it offshore. They brought them here, about 6-7 of them, paid for all their flights, accododation plus living allowances for months to get them not only familiar with operations but also comfortable with their opposite numbers here onshore- relationship building, understanding culture etc...and one or two if the account mgrs would be more permanently based here (on a competitive salary) ...hence 'blended'..
And i helped with the business case- yep even with alk that, the client was saving good money, even risk adjusted - the roi, NPV etc was all good...just goes to show how expensive doing business in australia is relative to alternate soluions.

 

Yes...SunCorp is ahead in this area.

The two Sydney banks aren't yet fully utilising this model yet....watch that space...matter of time....

 

That's fear mongering. You know CBA are getting a large space at ATP in Redfern ready in around 2020 for 10k employees in addition to all their other spaces in the city. Why would they commit to leasing that space (publically announced a few months ago) if they were to mass offshore jobs?

 

How many employees are there at CBA again??

How many building will they be keeping again?

I take it you work for the CBA...on a contract basis? That should get interesting...first directive will be convert contractors or let them go unless they are essential. This is coming....they estimate that 400k jobs will be lost in IT. Also the jobs in IT are different...the frontline skills requiring P&L, business analysis, and Project & Vendor Management skills are now the go. If you are technical it is matter of time...

This is happening across the world. Be prepared or go the way of the Dodo....even in India this is happening as the wages there are much higher nowadays, thus they (Indian Outsourcers) are moving operations to lower wage countries in Eastern Europe and Philliipines.

 

Yeah I agree with this.

There is a lot of unsubstantiated information being thrown around this thread now which is just fear mongering.

 

Big banks cut 1475 jobs to maintain profits

What do you think will happen when profit growth comes off the boil later this year? They are already under scrutiny and if labor gets in a Royal Commission. They can't simply raise rates or screw customers. They will have to look at other efficiencies....or do you think growth will continue in terms of earnings for banks.

A lot of this trimming is done in 10s or 20s so not reported or via consolidation of jobs.

Nocookies

It will be CBA which will need to take the hardest look soon as their model maybe unsustainable as other banks catch-up technology wise and their advantage disappears.

 

In that case, come and work in briabane ...we could use some pop growth...just dont surf on our beaches .

 

And that is precisely why APRA and ASIC stepped in. And it's also precisely why these regulatory interventions wont be going away any time soon.

 

Love Brissie. Ps. I have a new contract that's worth 10% more to me than the previous one. Same role.

 

same thing is happening in Brisbane, my local area here in south east bayside brisbane, which usually has lots of professional OO types and now a lot are selling up. A flood of listings just came online and asking rents for all housing types are down at least 10% with increasing vacancies. Went to quite a few open houses these couple weekends and reason for selling is dominantly moving interstate for job, back to new zealand, back to UK, down to the gold coast, etc etc..

In contrast last year prices were moving up and not much stock for sale at all.

Reckon Brisbane is following Perth down the rocky road this year, just not as quickly.

Shudder to think what would happen in banking sector and sydney properties with so many IO loans when the next round of BASEL banking standards come into play.

 

I agree its not easy to get a reallu good gig in brisbane. ..the quality and effectiveness of services (compated to what it costs) has to improve to be globally competitive. ..but it is happening - its a transition and takes time. As i said in other posts, it was much worse 5-6 years back and they have made considerable progress in that short amount of time. This seems to continue as there is evidence of non mining spend and development so no i dont think it will be a perth by any means.
Sure they are going to have corrections, and that is a normal part of any cycle. By no means does brisbane have the structural economic issues that perth and adelaide have.

 

Frankly I didnt know of a bank that did it internally before.

Asset valuation modeling is a specialization that is (and should be) done by companies such as corelogic, onthehouse and the the mini boutique valuation companies because they have investment in building a knowledge-base in this area. Why would a bank want to do it?

And even then, when was the last time you received a phone call from an overseas person who wanted to value your house? Outsourcing and offshoring are not one and the same thing.

I respect where you are coming from but I think you and me are not aware of how banks operate to want to comment on their staffing strategy.

 

Agreed. They have outsourced it forever...the only difference is that it used to be done by fax, then by smartval , which went belly up, and now by VMS or Valex...

 

Great thread!

I think we will need another set of data in 3 months to confirm this trend. IMO though, this is the beginning of a correction - falling/slowing income growth; tightening housing finance; restrictions on foreign ownership; and we've got housing construction at an all-time high further increasing supply. And let's not forget the cherry on top - threats to negative gearing and a bank royal commission!

I think government intervention will be required to arrest this fall - probably in the form of another first home buyer's grant ($50k anyone?) A.l.a Howard in early 2000s and Rudd in 2008. The question is whether or not this would be a politically favourable move.

Good time to watch.

 

A first home buyers grant only helps the people already owning the properties (particularly at the lower end) as all the prices then end up getting inflated... while obviously that would help me, its better to keep it as it is, restricted to new properties only.