English Bob July 10, 2009

IT looks like it’s full steam ahead for a move to India….I know it will be seen as a move to maximise profits, but I can’t see how this will benefit anybody involved with mortgages.

Might be anther one on my blacklist, time will tell.

Concerned Australian July 12, 2009

Good one ANZ. You and so many corporations take jobs offshore and then will wonder why there are no Australians with any jobs or money to pay for your services - let alone qualify for home loans. If you want to take jobs off Australians and give them to others in other countries, then don’t call yourself an Australian Company - move your head office and operations to another country.

Savvy Investor July 13, 2009

Hi All,

I got outsourced by another Bank some 8 years ago - It is an economic reality that if you can not be competitive then you will be superseded. Until the service actually gets worse we should not pre-empt what may happen, that is not fair. Nor would you expect a person to still be using an out of date product if a cheaper and better quality one existed today.

Having said that I have yet to be convinced that they are truly getting a better deal as many outsourcers are slowly beginning to insource again after 10 years. Many things are culturally diverse and non trivial issues can become enormously costly when misinterpreted and allowed to steamroll for long periods of time without being corrected as my ex-employer is beginning to find out. The ANZ is at least being smart in that it is mainly routine stuff and not creative design stuff that it is outsourcing (at least that is my understanding). Less chance of major/expensive and time consuming rework there….

Also please note that after China, India is fast becoming our largest purchaser of our goods and services. This is positive news for the exports that keep our chins above water in an economy that barely covers its welfare payments from its income tax base, even if it does means loss of local jobs in the short run it may mean we can pay our bills to other countries at the end of each month. India spends far more with us then they earn from us - and if they earn more, they are quite likely to spend more with those that helped them earn it.

In the current penny-pinching world we live in, Quality is taking a beating at the expense of Price at the moment but eventually the Value equation (Value = Quality/Price i.e. Value is a measure of quality for any given price point) will turn around and Price will take a back seat to the quality of the goods and services we are prepared to accept. We see price reduction and think we are getting better value but we do not see that quality is falling too (played with any cheap Chinese toys lately?) so all we are doing is resetting value to a lower price point (reducing the standard we are prepared to accept/live with). This is what the Banks are doing too. When enough things break down too soon people will stop buying cheap and restart buying quality and that is when all the economies start to pick up the pace once again. Its all part of the global recovery we have to have (eventually).

Concerned Australian July 13, 2009

Thank you Savvy Investor. Thank you for your lecture on economic rationalism. The GFC has been borne from economic rationalism. Greed comes from economic rationalism. And, social unjustice and unrest comes from economic rationalism. When you see a society of high unemployment, dispair and crime, then you might want to re-adjust your attitudes of economic rationalism. You can’t tell me that having a society of a few wealthy and a lot of poor is good. And that is what is happening with this economic rationalism.

Just Needed to Vent (Not Dutch) July 13, 2009

Hear the bell,it tolls for thee. Sorry to say ladies a Gentlemen, the banks have position and power and will run a muck. Most CEO’s are around for a short time and rest assured, these guys are trained killers. They won’t stop till someone stops them, outsourcing, broker rationalisation and minimising competition. However there is a tipping point and like every killer, they all make mistakes. I’ve seen what outsourcing does and it’s issues. Industries that took it on 8-10 yrs ago are now realising the error of their ways. It was cheap and there was a price to pay!

Savvy Investor July 13, 2009

Hi CA,

I have explained that I was a victim of outsourcing, and that whilst I do not support it I do understand it. It is the basis of the society we have built and while not perfect I prefer the model to most of the others out there.

I asked only that people consider that whilst this is terrible for those losing the jobs, the Net effect may be positive. I refuse to be pessimistic about every issue. If we lose 500 jobs in Banking but create 5000 Australian jobs through more Export $ being earned, then that is not a bad deal from a macro level. Last I checked we spent about $52 Billion on welfare and took in $54 Billion in PAYG Taxes - so really those wages in ANZ barely offset the welfare bill and in the balance of things will have little effect on the rest of the population. Any real money we make for the country comes from our Exports (our biggest issue is still that China can not afford to buy as much from us).

Unfortunately Banks don’t make things - they just transact (shuffle paper and waffle). Manufacturing and Exporting provide the things we need to live and work.

As to what is happening - you have asserted much, but provided no links between anything as yet. If (as you state) social injustice and unrest come from what we have here then why is India so desperate for these jobs that they are willing to do them for so much less? Maybe they crave the very economic rationalism you despise because it is so much better than what they have? Why should those 500 (or more likely 5000 jobs) we create in India be any less important than these 500 jobs we lose here? They need them far more than us (look at their standard of living compared to ours), so whose greed are we pandering to by keeping them here when they can more efficiently or effectively be being done there? Aren’t we propping up high paid privileged workers here at the expense of poorer underprivileged ones who could do the job instead there? By your own reasoning, you should be supporting this!

Savvy Investor July 13, 2009

I had not checked the figures for years but after posting here is an update to latest figure on Income Tax versus Welfare (above) in 2009/10 figures :-

Individuals income tax: 122.710 Billion (42.2% of total revenue)?
Social security and welfare: 110.994 Billion (32.8% of total expenses)

Has not changed much in 5-6 years in relative amounts (only absolute). This is from a previous article posted here on LC.