Goldman Sachs to cut costs by moving abroad

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Goldman Sachs, the investment bank which is among the City's most high profile institutions, will relocate a substantial part of its operations to India next year to slash overheads in Britain.

The bank, whose nickname in the Square Mile is "the goldmine", told London staff in a confidential memo on Wednesday.

Goldman's army of high-octane investment bankers, who drive the company's profits and frequently earn six-figure bonuses, will not be transferred to the subcontinent.

Instead Goldman, an American bank that has extensive operations in the UK, will move part of the administrative and IT department to India in spring or summer.

The bank, which earned £418m in the three months to the end of May, said the plan was part of its overarching campaign to drive down costs.

It is the latest example of companies with extensive UK operations out-sourcing administrative operations or call centres to India, and more recently to other parts of Asia such as China and Thailand.

BT, Asda, and the insurers Aviva and Prudential are among the companies to have already hived off significant amounts of their back offices to places such as Calcutta.

David Viniar, the chief financial officer at Goldman, said in a voicemail to all staff in its operations, technology and finance division that "establishing Goldman Sachs India met a number of important objectives".

"It would enable the firm to reduce our expense base significantly and permit redeployment of critical resources to other functions across the organisation," Mr Viniar said.

The memo made no mention of job losses in London. But it added: "Obviously, this development will result in changes to our organisation and will affect certain functions and individuals."

Companies which have moved large chunks of their businesses to Asia say they are creating jobs rather than shifting roles out of the UK.

But, unions such as Amicus and Unifi are alarmed by the trend and have secured agreements to protect British jobs from some companies. Prudential has agreed not to cut any of its UK workforce at least until next spring, after setting up in India.