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Citigroup Inc, the world's largest financial services firm, on Wednesday said it will eliminate 17,000 jobs or nearly 5 per cent of its global workforce, even as it plans to move 9,500 positions to India and other low-cost locations.
With an aim to cutting its annual expenses by $4.6 billion in the next three years, the US-based banking giant on Wednesday said that its restructuring plans also include shutting down some offices and relocating employees.
While announcing these large-scale job cuts, Citigroup said that its total headcount would continue to grow in 2007, but the rate of growth, excluding acquisitions, new branches and other investments, would slow significantly.
The company could move a large chunk of its jobs -- which could be in the range of 5,00-8,000 -- to India, especially for equity research, investment banking and back-office transaction-related activities, sources close to the development said.
The total number of jobs to be eliminated equal more than half of the total number of positions Citigroup added to its workforce in 2006.
More than 9,500 jobs will be moved to lower-cost locations, both domestically and internationally, the company said.
"Ultimately these changes will streamline Citi and make us leaner, more efficient, and better able to take advantage of high revenue opportunities," Citigroup chairman and CEO Charles Prince said in a statement.
Industry observers said that the job cuts were more aimed at achieving an optimal level of performance, rather than plain cost savings as the company was also aggressively going ahead with acquisition plans.
Earlier this week, Citigroup agreed to buy Taiwan's Bank of Overseas Chinese for about $426 million, while it is also in talks to acquire Japan's third-largest brokerage firm Nikko Cordial Corp for more than $13 billion.
Besides, it is also reported to be in discussions to buy New York-based hedge fund Old Lane LP to bring in Vikram Pandit as head of its alternative-investments group, which includes private equity and real estate businesses.
The company is looking to achieve savings worth $2.1 billion in the current year alone from the proposed restructuring initiatives, for which it would assume a pre-tax charge of $1.38 billion in the first quarter of 2007.
Citigroup said it would also eliminate certain layers of management, consolidate certain back-office, middle-office and corporate functions at the business, regional and headquarters levels to eliminate duplication of effort.
The job cuts are part of a review report prepared by Citigroup chief operating officer Robert Druskin to bring the company's costs in line with its rivals.
The company's top brass has come in for sharp criticism from certain shareholders, including Saudi Prince Alwaleed bin Talal, as its equity returns have trailed most of the other US banking giants, while the company's expenses rose at a rate twice to the revenue growth in 2006.
Citigroup's total expenses stood at $52 billion last year.
The company, which will announce its first quarter results on Monday, has also said that it will simplify and standardise its IT platform to increase efficiency, drive lower costs and decrease time to market.