Since the beginning of 2012, the finance industry has seen well over 1,700 jobs move offshore, with corporations seeking lower employment and information technology costs. Westpac's (ASX: WBC) chief executive Gail Kelly has conceded that such a method offers both an "efficiency and quality dividend", whereby a higher quality service can be offered at a lower price.
However, after sending a total of 707 jobs overseas since the beginning of 2012 (142 of which have been this year), Westpac has decided that there will be no more position relocations for the remainder of the year, realizing the importance of adjusting to the changes that have already been implemented.
Leon Carter – National Secretary of the Finance Sector Union (FSU) – welcomes this decision, declaring the importance of keeping jobs onshore and the need for the Australian Government to intervene to protect finance workers and consumers alike. This followed recent announcements that ANZ (ASX: ANZ) would make positions redundant, whilst National Australia Bank (ASX: NAB) has relocated jobs overseas on a number of occasions over the past few years.
While the objective of relocating jobs internationally is often cost-related, customers often feel concerned about their personal information being accessed overseas. Customers are also less satisfied with customer service provided by companies that offshore, as opposed to those who keep employment within Australia. Commonwealth Bank (ASX: CBA) currently stands as the only 'big four' bank to have not replaced Australian jobs with workers in low-cost nations, believing it can gain a competitive advantage over the others by taking a customer-oriented approach as opposed to cost-cutting.
Foolish takeaway
The recent financial services trend of offshoring jobs will increase profit levels of the banks. With the share prices of each of the big four banks' sitting at four-to-five year highs, we could see the market value climb ever higher. Should the corporation's customer service levels begin to decrease however, customers may begin to take their business elsewhere.
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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.
