Boston, MA 01/28/2014 (wallstreetpr) – Bank of America Corp (NYSE:BAC) is expected to announce more job cuts this time in its technology division as some reports in the Indian media suggests. Such job cuts while detrimental to American interests may be good news to the Indian ones.
More Job Cuts And More Outsourcing?
A recent report in an Indian financial paper hinted that the American financial sector and particularly Bank of America Corp (NYSE:BAC) are planning to shed more employees particularly in the IT and Technology divisions. The IT and Outsourcing industry in particularly is heavily dependent on American companies to generate an estimated $108 billion in revenues annually. In fact, Bank of America is also said to be the largest client of the current number 2, Infosys Ltd. (ADR) (NYSE:INFY) and any news on the job cutting measures translate into good news for such firms.
The U.S. administration is not pleased with the shift of such jobs to cheaper destinations as these spell doom to the local job market. They may make good economic sense to the individual companies but tend to harm the American economy in the long run and the current president has voiced his displeasure on several occasions.
Should Companies Forsake Cheaper Alternatives?
This again brings us back to the role of governments in running businesses. We have already seen the disastrous consequences of governments trying to run businesses. Though this may not be true in the U.S. it borders on government interference in company’s internal affairs.
Banking institutions like Bank of America Corp (NYSE:BAC) have been facing some turbulent times since quite some time. The recent government lockdown, the bad macroeconomic environment, falling mortgage rates and volumes in business has affected their abilities to make profits. BAC has been fighting off the legal issues surrounding the takeover of Countrywide Financial. It has put into effect several cost cutting measures including employee layoffs and branch closures. Not all the jobs have migrated to India. But the bank needs to do more to shore up its profit margins.