This article first appeared on the Boston Business Journal’s website.
State Street Corp. plans to eliminate approximately 1,200 jobs this year, mostly in middle management, another cost-cutting move after it reduced its global real estate footprint by about 1 million square feet, an executive said Tuesday.
Boston-based State Street CEO Ron O’Hanley had said in April that the company would not conduct any layoffs through the end of 2020 in light of the pandemic, saying at the time “this is the right decision for our people, our clients and our communities.”
But at an investor conference last month, he signaled layoffs could be coming, saying the no-layoff pledge “will go away.” During an earnings call on Tuesday, State Street Chief Financial Officer Eric Aboaf announced the job cuts and said the company was taking an $82 million severance charge as a result.
The freeze on layoffs during the early months of the pandemic marked an aberration for State Street, which has been on a years-long drive to cut costs. It eliminated 3,400 jobs in 2019.
“At the outset of the pandemic, we committed to suspending headcount reductions through 2020 in order to provide our employees with some security during a time of tremendous uncertainty,” spokesman Brendan Paul said in a statement.
Paul declined to say how many of the affected jobs are in Massachusetts. The company has been cutting its headcount in higher-cost locations like the U.S., while adding personnel in lower-cost countries like India and China.
It has approximately 39,000 employees around the world, according to Paul.
The positions to be eliminated “are primarily those that are part of operating model changes, business process changes as well as automation,” he said.
State Street has established an internal “talent marketplace” in part to help those whose jobs are being eliminated find other work inside the company. Aboaf said during the earnings call that the company will continue to make “critical hires” and to “in-source” some jobs that have been done by outside consultants.
Aboaf also said Tuesday that State Street has shrunk its footprint by roughly 1 million square feet — or about 13% of its total square footage — across 20 sites. He called the initiative “the start of our process of reconfiguring our office space for a post-Covid environment.”
By reducing its footprint, State Street expects to save about $30 million this year, according to Aboaf.
In early 2019, State Street agreed to move its headquarters from its long-time home in the Financial District to a new mixed-use development near City Hall. Its lease for about 500,000 square feet at the site is set to start in 2023.
Paul said there is no change to the company’s headquarters plans.
State Street’s fourth-quarter revenue fell by 4% year-over-year, to $2.9 billion, because of a significant drop in net interest income. Its quarterly net income dropped by 5%, to $537 million.
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January 20, 2021 at 09:00PM
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State Street to cut 1,200 jobs as no-layoff pledge expires - MassLive.com
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