State Street plans to cut the jobs of 1,200 employees this year, after pledging to avoid layoffs during the pandemic

State Street plans to cut the jobs of 1,200 employees this year, after pledging to avoid layoffs during the pandemic
Boston, Massachusetts.Thomas Pallini/Business Insider
  • State Street Corp. announced on Tuesday plans to cut around 3% of the jobs in its global workforce, eliminating 1,200 positions in the coming year.
  • The cuts will allow State Street to save $120 million in 2021, and about twice as much in 2022, according to the company's Chief Financial Officer.
  • The CEO said the primary reason for the job cuts was the company's increased reliance on automation.

State Street Corp. will eliminate 1,200 jobs in the coming year, CFO Eric Aboaf announced during the company's quarterly earnings call Tuesday.

Employees affected by the job cuts at the Boston-based financial services company will mostly include middle management, though State Street CEO Ron O'Hanley said he expects many of these employees will find new jobs internally, through the company's Talent Marketplace job-placement system.

The cuts, which would be around 3% of the company, will allow State Street to save $120 million in 2021, and about twice as much in 2022, according to Aboaf. The extra money will help compensate for revenue lost in 2020, after State Street's revenue declined 4% last year, as low interest rates made the financial sector less profitable.
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Read more: State Street is working to bring 8,000 people back to the office. The firm's COO explains the steps it's taking, from tracking 'readiness factors' to using contact tracing technology.

However, O'Hanley says the main reason for the job cuts is that automation has become more efficient for the company, forcing it to rely more on upper-level employees rather than middle management.

"The roles we anticipate being eliminated are primarily those that are part of operating model changes, business process changes as well as automation," a company spokesperson told Insider. "While we do anticipate some positions no longer being needed as we evolve and grow our business, we are planning to continue to redeploy many colleagues to new and strategic roles, as we did in 2020 when more than 3,000 employees moved to new roles within State Street."
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State Street's job reduction plan comes after the company took a bold stance at the onset of the pandemic. In April, O'Hanley pledged not to lay off any employees during the COVID-19 crisis. At the time, the CEO's decision was a part of a plan to stabilize company morale, but O'Hanley says when he made the initial pledge he had no idea how long the pandemic would impact his company.

"Nobody knew back in April what was going on here," O'Hanley said during the earnings call. "Nobody knew [when] there would be a vaccine. Not that we're out of this by now. But at least one can envision the end here." See also: Wall Street job cuts are back - here's the latest on what Goldman Sachs and other big banks are doing
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State Street's decision falls in-line with cuts the company has made in the past. In 2019, State Street cut 3,400 jobs, after planning to only cut 1,500.

Despite the anticipated job cuts, O'Hanley says State Street still plans to move into its new flagship building in the One Congress tower by 2022.

State Street is just one of many financial institutions in the US to make significant job cuts due to the pandemic. Goldman Sachs and Citigroup made several job cuts in 2020 to offset lost revenue.
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