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First Union is calling on the Government to "do whatever’s necessary" to prevent the country's big banks from offshoring jobs overseas, or outsourcing them to other New Zealand entities, in cyclical corporate behaviour it says is based on "unlimited greed."
Callum Francis, First Union's national organiser for finance, says union members working for three of the big four banks have repeatedly raised concerns about the volume and nature of hundreds of banking jobs outsourced to a third party provider or offshored to countries such as India and the Philippines. Francis says, according to bank workers, customers are suffering from worse service while bank workers face redundancies and job insecurity, and NZ’s financial sector loses key expertise and growth opportunities.
"The driving force behind banks’ offshoring and outsourcing of New Zealanders’ jobs is a desire to reduce wage expenditure and increase profit margins at any cost - it’s based on unlimited greed," Francis says.
"During a time of increasing unemployment and a rising cost of living, it’s unfathomable that successful companies would prioritise increasing already obscene or super-normal profits at the expense of New Zealanders and the communities that support them."
'Committed to serving customers brilliantly'
Just last week BNZ confirmed plans to shift 40 to 50 lending services jobs from NZ to Accenture in India. Of this a BNZ spokesperson says the bank's "committed to serving our customers brilliantly and delivering market leading products, services, and expertise."
"We want to bring the very best global expertise and capability and deploy it locally, to enhance our customers’ banking experiences. To help us bring global best practice to New Zealanders, we partner with a number of international organisations, such as Accenture, Microsoft, and Amazon," the BNZ spokesperson says.
First Union released what it describes as current offshoring and outsourcing projects at ANZ, BNZ and Westpac based on restructuring and consultation documents provided to affected union members. They are;
- ANZ, over the last 2 years, has been reducing or reallocating lending services and other back-office roles (non-customer facing) and functions. Initially, ANZ started with what was referred to as a "50/50 split of work"; sending 50% of the work offshore to be completed. However, this has been a starting point for a further redistribution of jobs offshore. The eventual outcome in most instances has been at least a 25/75% split favouring offshored jobs rather than keeping work in NZ. Francis estimates that hundreds of jobs have been offshored by ANZ over the last two years. ANZ declared a statutory net profit of $1.04 billion for the six months ended March 2024.
- BNZ have been even more aggressive in their approach to offshoring NZ jobs. Last year, BNZ got rid of approximately 80 roles from within their financial crime operations by offshoring 75% of the fraud team. This signalled the beginning of another more recent process with similar justification provided to offshore another 40 roles from lending services and "non-customer facing" roles who deal with apparently "less complex" transactions. Francis estimates that at least 130 jobs have been offshored by BNZ over the last two years. BNZ declared a statutory net profit of $762m for the six months ended March 2024.
- Westpac has for 5 years been outsourcing a significant number of roles to a 3rd party provider [in NZ]. This has meant that they have moved to a model of 50% (if not greater) of all contact centre general queries being answered by workers employed by a 3rd party. This has unfortunately paved the way for 1/3rd of the work received by the bank's customer care department to also be received and actioned by this 3rd party. Francis estimates that at least 100 jobs have been outsourced by Westpac over the last two years. Westpac declared a statutory net profit of $477m for the six months ended March 2024.
Francis says he's not aware of any such activity at ASB.
"All I can say is that we're not aware of whether ASB is doing it or not because if they are doing it, our membership is potentially not affected or not affected as far as I know," Francis says.
He says First Union has nearly 2500 members working for the big four banks.
'We have grown our headcount'
Interest.co.nz sought comment from the big four banks.
A Westpac NZ spokesman says Westpac hasn't recently offshored any roles and doesn't have any plans to do so.
"We have grown our Westpac headcount by more than 500 people since September 2021. We have onshored roles in tech and financial crime, and have plans to bring more tech roles onshore in the coming year."
"A small number of contact centre and customer care roles are outsourced to a New Zealand-based company, to ensure we can continue serving customers as flexibly and effectively as possible," the Westpac NZ spokesman says.
An ANZ NZ spokeswoman says like any business operating in a competitive and challenging environment, the bank s always looking to streamline and simplify its operations.
"ANZ Group has had teams based in Bengaluru and Manila that provide technology, operations, analytics and other support functions to other parts of the Group for many years. We call them our Group Capability Centres."
"These Group Capability Centres are home to around 20% of ANZ’s global employee base; with around 10,000 ANZ employees with technology and leadership skills that support operations and innovation across all our divisions and functions across the world," the ANZ NZ spokeswoman says.
"ANZ NZ utilises the services of our Group Capability Centres for various functions, generally non-customer facing tasks that complement and support the work of our teams based in NZ. This gives us access to leading edge capabilities that are hard to replicate locally at scale."
She says it also helps provide NZ customers with access to services when they need them, including after-hours scam and fraud support.
"We’ve been using our global workforce for a long time – over 35 years. We will always have a big presence in NZ, supported by dedicated and specialised ANZ teams around the world."
"Where the roles of NZ based staff may be impacted by any transfer of work to our Group Capability Centres, we work closely and consult with all staff who may be affected by changes to their roles and, where possible, we find them other roles with ANZ. Many staff are redeployed into other roles," says the ANZ NZ spokeswoman.
"In relation to whether ANZ NZ has outsourced roles to other entities within New Zealand in the last two years. Like most businesses ANZ NZ has various services provided by external companies – for example property management outsourced to CBRE."
ASB and BNZ are yet to respond to requests for comment.
Tip of the iceberg?
Francis is concerned the moves by ANZ, BNZ and Westpac to date might be just the tip of a large iceberg, worried offshoring and outsourcing jobs could ramp up further during this part of the business cycle.
"If you think about it, there's not much value in an organisation offshoring 20 to 50 jobs from a department because it's a complex process to do it, to set it up, to make sure everything's in place...It's not cost effective. It doesn't make a lot of sense. So there must be a broader plan and more jobs that are going overseas. I think it's just kind of the writing's on the wall, to be honest," says Francis.
So what does First Union want the Government to do?
"The Government needs to do everything possible. Critically, from our point of view, it's to protect workers and to keep jobs in New Zealand."
"It's important that they send a signal to employers and the industry that there's a requirement, if not an obligation, on these organisations to not just keep jobs and expertise in New Zealand, but to help the country grow," says Francis.
"It's just disappointing to see these organisations, I'd say, almost foregoing their social obligations and responsibilities to New Zealand. Because if these guys aren't going to try and keep jobs in New Zealand, it's just going to set a precedent."
Francis argues the highly profitable big banks should be supporting people and communities and creating opportunities for them. Instead they are "abandoning our communities and turning their backs on New Zealanders, just because they think it'll make them a few extra bucks."
"Offshoring should be seen for what it is - an admission that banks would rather send jobs and opportunities overseas where labour is cheaper and less regulated, when they should be building capability within New Zealand and helping to develop a progressive industry."
He argues offshoring robs NZ financial services workers of opportunities to upskill, and depresses pay rates across the entire industry.
'Difficult for a government to intervene'
Commerce and Consumer Affairs Minister Andrew Bayly says it's disappointing to see services and jobs moving offshore.
"I think it's important that we do have those sorts of services, but ultimately, these are commercial enterprises, and they're trying to achieve the best outcomes for their shareholders...and it's difficult for a government to intervene in things like that. But yeah, it's disappointing to see jobs leaving New Zealand," Bayly says.
As of March 31, ANZ had 7,185 staff in NZ, down 67 year-on-year. Westpac NZ had 5,263, down 111 year-on-year. And as of September 30 last year, BNZ had 5,400, up 154 year-on-year.
*Bayly comments courtesy of Dan Brunskill.
72 Comments
I can’t see the government doing a thing here. If a business wishes to offshore jobs, it will offshore jobs. This isn't the role of the state to intervene.
It is sad however that this is from major banks who already have and are reaping record profits and can afford to eat the wage increases without blinking an eye.
Morally, yes I'd agree with you wholeheartedly, however taking a step back and viewing objectively, If the state were to intervene to force businesses to keep jobs in NZ, this would send a serious message to international businesses who would likely start bailing out of NZ to some degree, or avoiding coming here to do business in the first place. Govt can regulate to prevent crime, ensure fair and reasonable business practice etc but I'd imagine if they took this step, it wouldn't help NZ in the long run at all which would be to our detriment. We rely on international trade and business. We have already pulled billions form the economy with the oil and gas decisions - but looking at that from a financial perspective only that was foolish. We cannot afford to disincentivise other industry.
They can’t create credit and debt without insurance, the duopoly of Aussie insurance companies we have in NZ are undertaking the same practices as the Aussie banks, the Aussie insurers are also bringing in Aussie supply chain companies too, to do work in place of NZ supply chain businesses.
Some will say if they are competitive what's the problem.
The fact is they arn't competitive, they are given the work directly without a competitive process because of the contracts they establish in Aussie. To boot, if they are being offered a contract for the whole of Aussie, and the insurance company says you must also cover NZ as part of that contract, even if the supply chain company are breaking even, or losing some money in NZ, do you think the supply chain company is going to refuse the Australasian contract?
These practices being allowed to continue are nurturing a growing zombie class of businesses in NZ and add to the already considerable outflows of capital as head office expenses and profits.
What effect does this have on NZs productivity numbers?
Congratulations. You have spent the past 4 years trying to convince management that you could work 100% remote. No need to commute to the office. They believe you now. But if they never need to see you then why not replace you with someone in a Mumbai cubicle for a quarter of the cost or worst case 4 people in 4 cubicles for the same cost.
I laugh at these cases when companies who do so fail so hard they have opened themselves up to costly legal battles & compensation from AI failures. Then there is the amount of those who think there is no risk to offshoring jobs much like the private clubs management in Aussie who found their entire customer database and private identification checks including passport and drivers license data sold & available online as the contractors overseas decided they could get better returns just abusing the company, ripping it off and there was nothing the company could really do about it as they were out of jurisdiction. After all what was it going to do, fire them? lol they already ripped off the company and quit.
much like the private clubs management in Aussie who found their entire customer database and private identification checks including passport and drivers license data sold & available online as the contractors overseas decided they could get better returns just abusing the company, ripping it off and there was nothing the company could really do about it as they were out of jurisdiction.
Heads up be very suspicious and doubtful of any bank that does this. Your transaction data is the least problematic part being lost; the identity theft and money theft is far more likely by poor offshoring decisions. Alongside staff and client data being stolen which is a bit of a kicker.
In effect, they can pretty much all run their New Zealand operations from Head Office, in Sydney. There's no real need for a footprint here, as the days of having to put on your best suit and tie to go and ask the bank manager for a loan are well in the past. "Just fill out our form online, and we'll get back to you" covers pretty much everything.
It's just the obvious next stage for the NZ finance sector - you offshore employment, maximise onshore rent extraction, and provide juicy returns for offshore equity holders (typically parent banks). We are basically being milked.
And, what produces that milk? A housing ponzi economy fuelled by ever-increasing private sector debt and ecocide, and a central bank that seems uniquely determined to throw commercial banks $7m per day in interest on their reserves. And, we wonder why most of the bank economists are especially hawkish.
There is no painless way out of this now. Just like there wasn't when we scrapped the rural subsidies in the 80's. Someone(s) always gets caught at the top. But that terrible truth can't stop was has to happen, from happening.
At the risk of flogging the same dead horse one more time - it's not about the cost of Debt, but what we use it for. The RBNZ, for all of its sins, looks to be a good way through banging our collective heads together. Let's hope we have the sense to avoid this process again.
The Government needs to do everything possible. Critically, from our point of view, it's to protect workers and to keep jobs in New Zealand
to enable offshore working, the NZ employers will need to enable offshore persons to access to NZ infrastructure. It's literally working in NZ but without needing any NZ work permit.
How is this different to allowing us to use cheaper building materials manufactured overseas?
Jobs that would also have been in NZ have moved overseas for that too. The price of building materials will not likely get any notable amount cheaper, companies will just protect and increase their profit margins
It's a doom cycle. Input (oil) prices were up, so they upped their prices AND their margins since everyone else was doing it. Now they are pricing themselves out of the market and have high debt costs. If only they had decided to keep a higher level of capital away they would be ok, but hey, can't be bunting off the shareholders hands that are always out.
What fantastic insight you have provided their Stefan. It's like having NZ Herald facebook comments, but without having to go to facebook. What other insights do you have? Perhaps something around avocado toast? Clearly you are very well informed and not an ignorant and angry arm chair critic.
Lol.
I stay home on my laptop ... creating code that improves productivity and sales for my customers businesses many of whom also work from home.
Not sure how productivity is improved by going somewhere else. Would just mean I have unpaid and unproductive travel time .... how would I be able to surf / foil every day or got the pub for lunch if I wasted all that time being somewhere else.
The people that go places to work ARE the problem with productivity.
Bit of a broad statement Old Skool...I am sure you are productive, but equally I am sure & I know from experience, that there are plenty of skivers working from home. And whilst there are probably plenty of unproductive folk in the office, there are many that have to go to work that aren't a problem productivity wise.Your plumber ain't gonna unblock your sh*tter from home & if I don't go to work,you won't be flying away on your holiday.There are good & bad workers across the spectrum...
That's true too. However when I used to work in offices a large majority of peeps spent a lot of the day surfing the web... and when I pass construction sites a fair few workers seem to have very long breaks.
I reckon there are those that graft and those that skive. Regardless the setting. Those that graft tend to do quite well.
Your argument that to be a content creator is ridiculous has some merit as it is a hard and competitive market to succeed and get income from. On the contrary however, I work with several mothers with young kids who have the opportunity to work in their role with more pay and flexibility to work around school pickups, hours etc thanks to the ability to work from home allowed by the company. Never assume that because someone works form home sometimes, or even all the time, that they aren't productive. They would not have been allowed to work from home by the business if there was proven decrease in work efficiency or productivity, as this was assessed in 2020-2021 internally to be shown that there was no difference in work done in or out of the office.
So long as these women are happy to be on the new permanent "mummy track".
Short memories, have they? I'm guessing Finsec was absorbed by First Union at some point due to dwindling numbers. This has been going on for 30-odd years, and every time an announcement is made the unionists throw up their arms and make a stir, but nothing is achieved. The pool of onshore staff gets smaller and smaller and there's nothing the union can do about it.
And why is the union shrinking, you ask? Well, it's because in the mid-'90s they told the better-remunerated non-management staff like IT and the trading desks they were paid enough already and they had nothing to complain about. So those staff took the hint and quit the union. Now they're paid well above union rates, with equal or better T&Cs.
I think you'd be shocked at how much customer data is already packaged up and sold in New Zealand perfectly legally. All of the big 4 here sell customer behavioural data to anyone willing to pay. What it's used for and how easy it is to de-anonymise when combined with other "anonymous" data sets is a secondary concern if one that registers at all.
Nothing against offshoring but given the confidential and secure nature of some of the information banks hold, like salary data that links people that work for certain government organisations, is this allowable from a national security perspective? One can easily imagine how a foreign intelligence service could use financial data to blackmail or track people of interest.
Not everything can only be viewed through an economic lens. Data is valuable to all sorts of people for all sorts of reasons. Those people residing and being able to be held legally accountable in New Zealand jurisdiction is important.
What are people's opinions on the offerings of local banks? Our mortgage is with BNZ who have done well enough by us, but I would consider moving to NZ owned, I just hadn't really worried about it as they've always offered us below the rates advertised by other banks. However our largest mortgage chunk is coming up early next year which would be a good time to shop around.
I've been with Kiwibank for a while, no complaints, everything dealt with via online messages. Decent offering if you want to install solar or similar - borrow $5k and they will give you back $2k over the next few years. I feel much more comfortable without my mortgage payments flowing straight overseas.
Also have a savings account with Heartland, works fine and decent interest rate on call.
So funny. As I keep pointing out, all those who have been in favour of "working from home" need to realise that if the job can be done "at home" it can be done a lot cheaper "at home overseas". If you want to keep your job, you would be best to get back to the office and fake being indispensable. Otherwise you're going to be replaced.
I think you're massively conflating things as you normally do. I highly doubt the banks decided to offshore because people were working from home. This would've almost certainly happened if people were in the office 100% of the time. Our company (when we were a multi-national) offshored manufacturing in around 2012, the workers weren't working from home when that happened.
They're offshoring because these jobs CAN be done from anywhere, and they're not highly skilled jobs, so offshoring to a lower cost country is a way to make money. If there wasn't a wage difference, they could've just said "well, we can retain our existing staff on their WFH basis" and downsized their head office building to suit.
Jobs are being offshored because these jobs have now been identified as being able to be done remotely, and when you out yourself like that, employers will take the next logical step of offshoring it. Most employers wouldnt offshore jobs where there has been no experience of whether having the job done remotely would work or not, most employers in high risk, highly regulated industries wouldnt take the risk of things going wrong even if it meant saving a dollar or two. But now they have the proof that they need to do it, so they are.
Whether you are high skilled or low skilled, all an employer needs to know is if you need to be around others to do your job. If no, then out you go.
You're really stretching with this one huh? Are you suggesting the multi-billion dollar a year companies like banks were up until recently oblivious to what these roles actually did on a day to day basis, and needed some Covid work from home guinea pigs to feel it out?
It's one thing to lose an element of oversight when people are not in the office, even though IT systems can easily measure outputs, but it's a completely different kettle of fish when you're talking a completely different country/time zone and native language.
The banks likely see it's no longer mammoth mortgage growth mode for the foreseeable future, so they don't need such a big local presence. The monthly salary for a banker in India is less than $1k NZD. vs $8k - $10k here. That's the driver.
Exactly. We live in a capitalist world.
Choose local careers well. Business, Ai and poorer countries are keen to replace you for a fraction of the cost - and countries that outsource well the menial tasks and replace them with skilled ones are driving their productivity improvement per Capita and hence their economy improves.
In this case banking is actually doing us a favor vs farming... they are improving productivity without importing the unskilled workers (and adding to our costs of public services/infrastructure).
The problem for nz is that we don't embrace the change and try to leverage it for our own good. Fighting it (like building a house ponzi that feeds the banks... instead of a productive economy)will only make us less competitive internationally and weaken our economy in the long run. Its a form of darwinism.
Outsourcing done well is a good thing.. the trick is for nz inc to swim with the tide not against it.. and make it work for us.
And again, it would be cheaper to replace those in office buildings, because the company has to cover the costs of leasing and occupying that building. Let everyone work from home, and use effective monitoring for productive output, and save big without the political fallout.
But then, this also ignores the fact that this has been going on since before the world wide web was rolled out in New Zealand.
BNZ
We're the bank for New Zealand. Our purpose is to serve customers well and help our communities prosper.
ASB
At ASB, we help New Zealanders every day get one step ahead financially (financial progress). We step up when it counts and make a difference in our communities (social progress).
ANZ
Our purpose is to shape a world where people and communities thrive.
Westpac
We aim to support our customers to become financially secure. Through sustainable business practices, we invest-in and care for the places we live so that our people and communities thrive and succeed.
And they manage to say it with a straight face.
The bank staff would even know that was their orgs purpose.
Their purpose is to hit their bonus by selling people whatever financial products they can flying as close to the edge of the rules as needed. And their shareholders purpose is to make more and more money.
Small business they are great. Even better online tools and security then the other banks (except for Rabo which adds in added security layers on top of 2 factor but it focuses more in the agriculture industry).
ANZ and ASB were both security and tech nightmares that really need to be gone or challenged, (but that housing market pie they hold is just waay too big).
Westpac is just no, knowing the backend risks, no.
The less said about BNZ & HSBC the better.
There is (or was) plenty of work available. If banks did this earlier the labour would’ve been free to go to other enterprises that needed it. We would’ve needed less immigration at the time. The timing now isn’t ideal, but I stand by my point that these labour resources need to be redeployed into businesses that can utilise them better and provide productive output. If no jobs are available, new businesses could be started. This is how we can get richer. There is a good comment about this above that the banks have actually done us a favour.
, "and they're trying to achieve the best outcomes for their shareholders" and there you have it. The view that a company's sole concern should be to keep producing an ever increasing return to its shareholders, irrespective of the effects on its employees or indeed, its customers.
Surely that has long been disproved. I certainly don't expect to see any government action, just hand-wringing.
Banks are losing their social license by making shareholder returns the only priority and as much I as I am loathe to see Govt interventions here are two options - Cost of offshoring jobs to be non tax deductable, increased profits fo Bank policies that provide less services to NZers by taxed at a higher rate just like indivuduals , starting at say 50% of excess proft.
I agree, but the term social licence is meaningless unless you have a population who are willing to put their money where their values are, and NZ isn't that great for this. For example, many stopped eating Cadburys when they switched to palm oil, as it was a very cheap and easy thing to do. However how many people do you think would change banks if they, say knew the level of investment their bank had in the fossil fuel industry? How many would drive the extra 2km to get to a different supermarket on principal alone etc? We would see drastic shifts in many areas if we all did such things en masse.
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