So this is IT transformation. "State Street (Corp.) will cut 850 jobs," says the headline on the Boston Globe story. Blame the cloud.
Indeed, State Street Corp., the huge financial services company with $22.6 trillion under manamgement, is firing 520 IT employees while another 320 will be transferred to two IT vendors, presumably as part of an outsourcing deal. State Street currently has 4,000 IT employees so the cuts amounts to 20% of that department. The fallout from the outsourcing deal and where State Street goes from here is explained in the press release:
"State Street’s internal IT resources will be more focused on research and development, including further use of innovations such as private-cloud computing that will create more sophisticated, client-facing solutions and services."
And here's the obligatory canned quote:
“Our business operations and IT transformation program reflects our commitment to maintaining an advantage that supports our continued growth in an increasingly competitive global environment,” said James S. Phalen, executive vice president and head of Global Operations, Technology and Product Development. “While making changes that impact a number of our employees is never easy, we believe that this move is a necessary step that will allow us to better deploy our resources in line with our core competencies, efficiently leverage the capabilities of our partners, and enable us to offer more sophisticated products and services to our clients.”
State Street presents a striking example of how the cloud will impact IT. Savings are estimated to be $575-$625 million between now and the end of 2014. For the record, State Street's revenues were up 8% and profits 18% in the second quarter. The layoffs and financial results were reported at the same time.
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