"The reduction in staff is a necessary part of the envisaged synergies from the combination of the two banks," Barclays officials said in a statement. Barclays' $91 billion offer to buyout of ABN Amro would create annual savings of $4.75 billion by 2010, Barclays said.
Part of those savings would be achieved through lower labor costs. In addition to sending thousands of jobs to countries where workers are paid considerably less than their Western counterparts, Barclays said it would also cut outright 12,800 staff positions if its plan is approved by ABN Amro shareholders.
Barclays said many of the offshore positions would be filled at ABN Amro's ACES unit -- an Indian subsidiary that the Dutch bank established for the procurement of low-cost back office and IT services. The Mumbai-based operation is known for enticing workers with dot.com style benefits like a gym, personal trainers and in-house juke boxes.
ABN Amro also has considerable experience outsourcing to third parties in India. The bank in 2005 handed a chunk of its IT operations, along with 3,200 tech jobs, to five vendors under more than $2 billion worth of contracts. The vendors include U.S.-based IBM and Accenture as well as Indian outsourcers Tata Consultancy Services, Patni Computer Systems, and Infosys Technologies.
Word of the planned merger and resulting shakeup comes less than two weeks after U.S.-based banking conglomerate Citigroup said it would offshore as many as 9,500 jobs as part of a plan to cut spending by $10.4 billion over the next three years.
The disclosures by Citigroup and Barclays lend credence to a report issued earlier this year by Deloitte predicting that offshore tech spending by banks will increase from the present 6% of the industry's $44 billion total annual IT budget to 30% by 2010.
Barclays is offering 3.225 of its shares for each ABN Amro share. If approved, the deal would become the banking industry's largest merger to date.