Citi laid out its plans for a major restructuring as anticipated this morning. The financial supermarket expects to realize an extraordinary $2.1 billion in savings this year, which it expects to grow further, reaching $4.6 billion in 2009. While this news is stellar for shareholders, it is a dispiriting announcement for the bank's IT workers, as much of the savings will come from job cuts.The plan calls for 17,000 positions to be eliminated, and another 9,500 to be moved out of high-cost areas like New York, Tokyo and London and relocated both domestically and internationally to places like Buffalo, Okinawa and even Poland. While the front-office will remain relatively unscathed, back- and middle-office workers are on the chopping block and could be out of work by the end of the week, according to reports.
Citi expects 35 percent of the savings to come out of their technology organization. By 2009, the company expects to halve its 42 data centers, which will no doubt have a major impact on all technology operations and development. According to a release, additional ways in which Citi will rationalize technology spending include "improved capacity utilization of technical assets and optimizing global voice and data networks; standardizing how the company develops, deploys and runs applications; and maximizing value by limiting the number of software vendors to operate at scale."
The move is massive, and at first glance, it is difficult to qualify. Has Citi found a method of technology management that will revolutionize IT spending? Or has COO Bob Druskin adopted the dated view that IT is little more than a cost center and cutting jobs and sending work overseas is the best way to stop the hemorrhaging? Weigh in with your comments.