In an effort to trim down expenses, Wells Fargo & Company (WFC) may shift some of its jobs away from the United States, according to Bloomberg that cited a report by News 14 Carolina.
The jobs in question are particularly in Wells Fargo’s technology, retirement division and other business lines. While the jobs are likely to be shifted to India and the Philippines, the amount was not disclosed.
This outsourcing news is said to be conveyed to the employees by Wells Fargo through an internal memo. In fact, the company is undertaking an assessment of the strategy. Besides moving overseas, positions might also be shifted to cost-effective locations in the U.S. as well.
For Wells Fargo’s international clients, round-the-clock services are the need of the hour. Hence, for efficient service providing, the company said it needs to increase workforce on a global scale. Wells Fargo already has its office in India and the Philippines and therefore, leveraging those platforms would help it in providing better service at reduced costs.
Wells Fargo has implemented a company-wide expense management initiative called Project Compass, focused on removing unnecessary complexity and eliminating duplication, as a way to improve customer experience and work process of the team members.
With such initiatives, Wells Fargo is targeting to bring down the quarterly non-interest expenses to $11.25 billion by the fourth quarter of 2012. In addition to this, with the conclusion of the integration process and continued economic recovery, expenses are anticipated to decrease, thereby providing opportunities for future improvement in operating leverage.
Wells Fargo has come out of the financial crisis well and posted nine consecutive quarters of growth in earnings per share. Going forward, we believe that with a diverse geographic and business mix as well as opportunistic acquisitions, the company is well poised to augment its top line. Cost-cutting measures are also a welcome and would help in improving its operating leverage.
Yet, the protracted economic recovery and regulatory issues remain as overhangs. Plus, a low interest rate environment would keep its margins under pressure.
Wells Fargo & Company shares currently retain the Zacks #3 Rank, which translates into a short-term Hold rating. One of its closest peers, U.S. Bancorp (USB) also retains a Zacks #3 Rank.
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