Wall Street giants get swept up by brutal second wave in India
Close to 13,350 km east of Wall Street, on a stretch of Bengaluru’s Outer Ring Road, sits what was once the heart of the global financial industry’s back office. Before the pandemic, this cluster of glass-and-steel towers housed thousands of employees at firms like Goldman Sachs and UBS Group, who played critical roles in everything from risk management to customer service and compliance.
Now the buildings are eerily empty. And with case counts soaring across Bengaluru along with other cities, work-from-home arrangements that have sustained Wall Street’s back-office operations for months are coming under intense strain.
A growing number of employees are either sick or scrambling to find critical medical supplies such as oxygen for relatives or friends.
Standard Chartered said last week that about 800 of its 20,000 staffers in India were infected. As many as 25 per cent of employees in some teams at UBS are absent, said an executive at the firm who spoke on condition of anonymity for fear of losing his job. At Wells Fargo & Co’s offices in Bengaluru and Hyderabad, work on co-branded cards, balance transfers and reward programs is running behind schedule, an executive said.
While banks have so far avoided major disruptions by shifting tasks to other offshore hubs, the Covid crisis has exposed the little-discussed vulnerability for companies that have spent decades outsourcing functions to the country. The second wave is intensifying even as vaccinations fuel economic recoveries in other parts of the world, heightening fears of a backoffice bottleneck at a time when Wall Street firms have rarely been busier.
“This is not a local, India-only problem, this is a global crisis,” said D D Mishra, senior director analyst at Gartner. The current wave will be “significantly bigger” and organisations with India-based staff “will need to take action to plan for and mitigate if needed,” Mishra and his colleagues wrote in a note last week.
Nasscom, the key lobby group for the $194-billion outsourcing industry and its almost 5 million employees, has downplayed the threat to operations.
But Mishra and fellow analysts at Gartner say they’re fielding a daily flood of calls from anxious global clients asking about the situation.
While the crisis has hit swathes of the nation’s $2.9 trillion economy, the latest wave has notably affected the twenty-something segment of the population that dominates outsourcing companies and is hard to replace. Most of them are Englishspeaking, technically-skilled workers.
Continuity planning
For now, back-office units are marshaling part-time workers or asking employees to perform multiple roles and re-assigning staff to make up for those who are absent. They are scheduling overtime, deferring lowpriority projects and conducting pandemic continuity planning exercises for multiple locations should the virus wave intensify.
A Wells Fargo employee said some work was getting transferred to the Philippines, where staff was working overnight shifts to pick up the slack. The San Francisco-based bank employs about 35,000 workers in India to help process car, home and personal loans, make collections, and assist customers who need to open, update or close their bank accounts. The company didn’t respond to a request for comment.
An employee at UBS said that with many of the bank’s 8,000 staff in Mumbai, Pune and Hyderabad absent, work is being shipped to centers such as Poland. The Swiss bank’s workers in India handle trade settlement, transaction reporting, investment banking support and wealth management. Many of the tasks require same-day or next-day turnarounds. A UBS representative didn’t respond to a request for comment.
With uncertainty surrounding how soon the Indian government will contain the crisis, one executive who asked not to be identified likened the situation to flying blind without any idea how many employees will be affected from one week to the next.
Rebalancing loads
After asking staff to work from home en masse last year, most continue to operate at near-100 per cent WFH levels
“We are looking carefully at how we can rebalance loads,” said Standard Chartered CEO Bill
Winters in an earnings call last week, noting that some work has been routed to Kuala Lumpur, Tianjin and Warsaw.
Barclays CEO Jes Staley said some functions were shifted to the UK from India. Call volumes have increased and people are distressed, he said, adding that signs of pressure was something to watch for. The bank has 20,000 employees in India.
Last year, when the lockdown saw these banks scrambling to keep their operations running, the European Banking Authority said the push to outsource support functions “exposed these banks to operational risks”.
After asking their employees to work from home en masse last year, most of them have continued to operate at near-100 per cent workfrom-home levels. Natwest Group’s workforce in Bengaluru, Delhi and Chennai — accounting for a fifth of its global total — is completely set up to work from home.
Management bandwidth
Similarly, thousands of Goldman employees are working from home, doing high-end business tasks such as risk modeling, accounting compliance and app building. A representative for the bank said workflows can be absorbed by the wider team if needed and there’s been no material impact so far.
Citigroup said there’s currently no significant disruption, while Deutsche Bank said employees were working seamlessly from home. Morgan Stanley and Jpmorgan Chase detailed relief efforts they are undertaking, but didn’t elaborate. Last week, HSBC Holdings CEO Noel Quinn said he’s “watching it closely” and ruled out any material impact at this stage.