CHICAGO • The global coronavirus pandemic could reverse some of the wave of outsourcing that moved back-and middle-office jobs to India as global banks took advantage of cheaper local wages.
The Indian government announced a nationwide lockdown on March 24, prompting hundreds of thousands of people to flee the largest cities. It is now hoping to ease the economic impact of the policy, which has crippled business activity and left millions jobless.
Some global banks are scrutinising their presence in Asia's third largest economy after the lockdown in March effectively closed call centres and other units overnight.
European regulators have also assessed the impact of India's lockdown on the banking industry this week, showing the challenges of providing infrastructure such as laptops required to work remotely.
The push to outsource support functions like call centres "exposed these banks to operational risks", said a European Banking Authority (EBA) report. "Many such offshore facilities were less prepared to address the Covid-19 operational challenges owing to a lack of opportunities for remote working or reduced availability of staff," it said.
JPMorgan Chase, Barclays and Nomura Holdings are among lenders that initially scrambled to keep their Indian operations running, people with knowledge of the matter said. Banking offices were all but deserted the day after the government imposed a lockdown to halt the spread of the virus, said the people, who asked not to be named discussing private information.
While regional governments including Karnataka, whose capital is Bengaluru, and Mumbai's state of Maharashtra were quick to grant special exemptions so some employees could go to offices, those policies were not across the board, and global finance firms struggled to put contingency plans in place.
"Our businesses within India remain operational while complying with all relevant government mandates and policies," a JPMorgan spokesman in London said.
Some banks transferred work usually done in Mumbai to other countries, the people said. Barclays struggled to answer calls from customers seeking mortgage relief, they said. The bank's Indian offices employ about 18,500 people, or 22 per cent of its workforce, making the country its largest international base.
Some firms are considering moving some Indian roles back home or to regions near their main markets, such as Eastern Europe and Latin America, to address operational risks, the people said.
Spokesmen for Barclays and Nomura declined to comment
Banks' business continuity plans "were largely able to address these challenges," the EBA said, though some firms initially struggled to provide work-from-home equipment. "Some banks also faced the challenge of swiftly providing the infrastructure required to enable large numbers of staff to work remotely," it said.
With some curbs being lifted, Barclays plans to have a small portion of staff in India return to the office in mid-June. Bank employees in other countries are preparing to return to their desks too, as governments ease social distancing restrictions. Citigroup will start bringing traders back to its London offices in the coming weeks. In Hong Kong, some of the banks have been slowly welcoming staff back.
BLOOMBERG
