The Law Offices of Vincent Wong Notify Investors of a Class Action Lawsuit Involving Peloton Interactive, Inc.

Bloomberg

Wall Street Giants are swept away by India’s brutal Covid Wave

(Bloomberg) – About 1,300 miles east of Wall Street, on a section of the Outer Ring Road in Bangalore, is the former heart of the global financial industry’s back office. Before the pandemic, this cluster of glass and steel towers housed thousands of employees in companies like Goldman Sachs Group Inc. and UBS Group AG played a vital role in everything from risk management to customer service to compliance. Now the buildings are incredibly empty. With the number of cases rising in Bangalore and much of India, work-from-home arrangements that have supported Wall Street’s back office operations for months are under heavy strain. A growing number of employees are either sick or trying to find critical medical supplies such as oxygen for relatives or friends. Standard Chartered Plc announced last week that around 800 of its 20,000 employees in India were infected. Up to 25% of employees on some of UBS’s teams are absent, said a company executive who spoke on condition of anonymity for fear of losing his job. Wells Fargo & Co.’s Bangalore and Hyderabad offices are running behind schedule on co-branding cards, credit transfers and rewards programs, a senior executive said. While banks have so far avoided major disruptions by outsourcing tasks to other offshore hubs, the Covid crisis in India has exposed a little-discussed security flaw for companies that have outsourced functions in the country for decades. The Indian outbreak is worsening even as vaccinations fuel economic recovery in other parts of the world, adding to fears of back office bottlenecks at a time when Wall Street firms have seldom been busier. “This is not a local problem that only applies to India is a global crisis,” said DD Mishra, Senior Director Analyst at Gartner Inc. The current wave will be “vastly larger” and companies with employees in India “need to take action to.” to plan and defuse if necessary, ”said Mishra and his colleagues in a note last week. Nasscom, the main lobby group for India’s $ 194 billion outsourcing industry and its nearly 5 million employees, has downplayed the threat to its operations. But Mishra and other Gartner analysts say they receive a flurry of calls daily from anxious global customers asking about the Covid-19 situation. The total number of coronavirus infections in India has exceeded 21 million, of which about 7 million have been added since mid-April. The state of Karnataka, whose capital is Bangalore, reported more than 50,000 new infections in 24 hours for the first time, almost half of them in the city. Experts have warned the crisis could potentially worsen in the coming weeks, a model predicts 1,018,879 deaths by the end of July, quadrupling from the current official figure of 230,168. A model created by government advisors suggests the wave could peak in the coming days, but the group’s predictions have changed and were wrong last month. In Bangalore, Delhi and Mumbai, the three main bases for the operations of the financial giants, infection rates have changed, reaching such alarming levels that local governments have imposed strict restrictions on movement. While the crisis has hit parts of the country’s $ 2.9 trillion economy, the latest wave has particularly hit the 20-strong segment of the population that dominates outsourcing companies and is difficult to replace. Most of them are English-speaking, tech-savvy employees. Continuity planning Currently, back office units are recruiting part-time workers or requesting staff to take on multiple roles and reassign staff to make up for absent staff. They schedule overtime, postpone low priority projects, and conduct pandemic continuity planning exercises for multiple locations in the event the virus wave intensifies. A Wells Fargo official said some work will be relocated to the Philippines, where staff will work overnight, to fill the gap. The San Francisco-based bank employs approximately 35,000 people in India to process auto, home and personal loans, handle collections, and assist customers who need to open, update or close their bank accounts. The company did not respond to a request for comment. A UBS official said many of the bank’s 8,000 employees in Mumbai, Pune and Hyderabad are absent and work is being delivered to centers like Poland. Swiss bank employees in India take care of trade processing, transaction reporting, investment banking support and asset management. Many of the tasks require turnarounds on the same or the next day. A UBS representative did not respond to a request for comment. Given the uncertainty about when the Indian government will contain the crisis, one executive who refused to be identified likened the situation to flying blind with no idea how many employees will be affected from one week to the next. Balancing loads “We are carefully examining how we can balance loads,” said Bill Winters, Chief Executive Officer of Standard Chartered, on a profit call last week, noting that some work had been directed to Kuala Lumpur, Tianjin and Warsaw. “We definitely think that we are very well taken care of.” Jes Staley, CEO of Barclays Plc, said some functions had been moved from India to the UK. Call volume has increased and people are desperate, he said, adding that signs of pressure are something to look out for. The bank has 20,000 employees in India. Last year, when these banks were struggling to continue operating following a sudden lockdown ordered by Prime Minister Narendra Modi, the European Banking Authority said the urge to outsource support functions exposed these banks to operational risk. “After asking their employees to work from home en masse last year, most of them continued to work almost 100% from home. Natwest Group Plc’s workforce in Bangalore, Delhi and the southern city of Chennai, accounting for one fifth of the world’s total, is fully equipped to work from home. End business tasks like risk modeling, accounting compliance, and app creation. A representative from the bank said that workflows can be adopted by the broader team if necessary and there has been no significant impact so far. Citigroup Inc. said there is currently no material disruption while Deutsche Bank AG employees said employees work seamlessly from home. Morgan Stanley and JPMorgan Chase & Co. have undertaken detailed relief efforts but have not specified the implications for their operations. Last week, Noel Quinn, Chief Executive Officer of HSBC Holdings Plc, said he was “watching” this “closely” and was ruling out any material impact at this stage. Aside from worrying about operational disruptions, employee well-being and securing medical assistance, many things take up management bandwidth in any large outsourcing unit. For example, a recent meeting of the Virtual Business Strategy Team for All Hands at Accenture Plc was not about the usual raise or promotions. Instead, workers asked for worker flexibility, reduced workload, and no meeting on Fridays, one executive said, asking not to be called to discuss internal company matters. Their size has become an obstacle, said one executive, but it is not clear where else to go. In terms of talent and scalability, he added, “We tell our customers that they are easing the level of service and expectations for those to come Weeks, ”said Mishra, the Gartner analyst. “This is not a normal situation.” (Updates with model prediction for peaks in paragraph ninth) For more articles like this, visit bloomberg.com. Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP

Comments are closed.