Posted on 07/24/2020 4:58:37 PM PDT by jroehl
Shares of Infosys Ltd., an India-based company to which scores of U.S. corporations are outsourcing information-technology work, rose sharply last week after announcing a pact to move 1,300 jobs from Malvern-based Vanguard Group to Infosys by October.
Those Vanguard staff — or “crew,” as Vanguard calls its 18,000 workers — track five million Americans’ retirement money in 401(k) plans and other defined-contribution accounts. That work accounts for about $1.7 trillion of Vanguard’s $6.5 trillion in total customer assets. The Times of India reported the value of the deal to Infosys, with $1.3 billion in annual sales, at $700 million. Chief operating officer PravinRao declared the Vanguard agreement “the largest deal in Infosys history” when he announced it Wednesday at an investor conference call.
It was a big step for Vanguard. The company already hires contractors, but in-house technology was at the heart of founder John Bogle’s vision of Vanguard as a branchless, low-cost investment alternative to Wall Street firms with their Main Street sales offices.
Focused on marketing and cost-cutting, Bogle’s successors let Vanguard tech fall behind. The company has relied for too long on dated mainframe computers and “software that is decades old,” according to a video presentation by the transferred workers’ boss, Martha King, who will also join Infosys.
She said Infosys will move record-keeping “into the cloud” of remote servers, easier to update. Transferred workers are guaranteed Vanguard benefits and no salary cuts if they remain with Infosys during the next year.
If investors cheered, the news concerned some Vanguard crew, as well as customers and investors so fond of the firm that they are known as “fans.” Founded in 1981, Infosys, along with its U.S.-, Europe-, and India-based competitors, saves clients’ money by consolidating IT work. This work starts in U.S. locations, where it reviews and update client technology, then moves to low-cost centers in countries such as India, where most of Infosys’ 240,000 employees work.
Mr. Mortimer J. Buckley President and Chief Executive Officer Vanguard P.O. Box 2600 Valley Forge, PA 19482
Dear Mr. Buckley:
As an investor in Vanguard, I am writing to let you know of my anger over your decision to outsource 1,300 crew members to the Indian consulting firm, Infosys. According to a recent article in a local newspaper, the jobs that will be outsourced include record-keeping, client administration, operation and technology. I am not assuaged by Martha King’s assurances of a seamless transition for several reasons.
Infosys is not only a company headquartered in India, it is an H-1B visa-dependent company whose workforce here in the United States is composed largely of expatriates predominantly from that country. Although many of Vanguard’s workers, like Ms. King, will be “rebadged” as Infosys employees, we know from experience this kind of outsourcing is the steppingstone to ultimately offshoring many of these jobs entirely to India, and the rebadged are then released.
Investors typically applaud cost-saving measures. But a savvy investor looks not just at next quarter or the following year’s 10K. Rather, we sound the alarm when we see how the actions of management can negatively impact the company, the industry and perhaps even the country in the long term.
I am not naïve. I know full well that many companies in your industry have adopted outsourcing and offshoring models. Many companies in the United States view their employees as expensive, undeserving and expendable. But they are being shortsighted. Greed makes them lose sight of how draining jobs can, and does, hurt productivity and innovation in the long term. Our company was founded on the simple premise that there should be no outside owners seeking profits. By outsourcing key functions and jobs to a company with a terrible track record for maximizing its corporate profits through labor arbitrage, you have effectively lost control of your ability to drive innovation and performance.
Jack Bogle, Chairman and CEO from 1975 - 1996, stated that “even one person can make a difference.” There was a time when outsourcing meant moving just low-skill jobs to low-cost countries while retaining high-skilled jobs. This is no longer the case.
Our crew members are both highly skilled and experienced. If Infosys stays true to past practices, it will eventually remove/fire the rebadged Americans once a modicum of knowledge transfer has taken place, give those jobs to lower cost expatriates or offshore entirely for rates that would be far below poverty here in the United States.
In the long run, this “brain drain” will have repercussions as the client service feedback loop we rely on for continual improvement will be broken. Understand, once these skills have been offshored, they will never come back. Over time, there will be fewer and fewer opportunities for Americans to work at Vanguard. Today we know our employees come to work each and every day with the single focus of giving “Vanguard clients the best chance for investment success.” Sooner, rather than later, that will no longer be the case.
Vanguard is far more than an investment company. For investors like myself, workers and management, it is an economic ecosystem. The bottom line, short-term gain that accompanies outsourcing/offshoring will be eclipsed by the long-term damage to the local economies of places like Valley Forge, Charlottesville and Washington when those job opportunities will no longer be available to our local high school and college graduates.
We saw how the nation’s largest financial companies were made vulnerable when, at the start of the Covid-19 pandemic, employees working offshore in India could not even work from home due to intermittent electricity and internet access. Because of Vanguard’s reliance on its native workforce, our clients were spared not only inconvenience but could rest assured that their retirements and investments safe.
In closing, your decision to outsource many of our key functions might seem like a prudent management decision; in the long run, it is not. Companies that outsource/offshore to countries with cheaper labor always experience declines in the quality of their service. I hope you will reconsider this decision.
If I ever call Vanguard and get India, I’ll take my rather considerable sums elsewhere.
I'll demand a native English speaker, done it before. I have severe hearing loss that makes it literally impossible for me to understand accents over the phone. Failure to provide me with one would be a violation of ADA - and you can bet I'd make a major issue of that.
I'm tired of paying people to screw me.
Do Fidelity and Charles Schwab outsource IT offshore? They are Vanguard’s major competitors.
Why does Vanguard exist? Just buy spy.
Huh, wonder why my tag line changed into gibberish in my first post.
‘If I ever call Vanguard and get India, I’ll take my rather considerable sums elsewhere.’
I’ve got significant dough in Vanguard assets as well...have to give this some thought...
Been bombarded by people from Indian looking for people
for Malvern
Now I know what this is about
” ... the news concerned some Vanguard crew, as well as customers and investors so fond of the firm that they are known as “fans.””
Speaking as a long time customer, my experience is that Vanguard has become interested only in big investors. They have substantially increased minimum deposit amounts for many funds. Also, we were required to establish “brokerage” accounts, to switch to electronic annual reports and prospectuses, to establish electronic transfer to our bank in place of our checkwriting capability from our Prime Money Market Fund.
We are trying to figure out how to withdraw all of our Vanguard funds without triggering an SAR at our bank. Our goal is to convert all investment funds to cash “in the mattress.”
I am really glad to have passed those by. Our life would be quite different having stayed in Pennsylvania instead of between Arkansas and Texas.
The best states are Tennessee, Florida, and Texas for their lack of state income tax. Pennsylvania, New Jersey, and Delaware all expect non-criminals and non-welfare recipients to pay their taxes while subsidizing crime and welfare recipients (these don’t report income to be taxed).
The SAR isn’t a problem and won’t occur if you simply roll over the funds to another service like Fidelity.
I noticed those Vanguard minimums a few years back and we decided Fidelity was the way to go. We’ve had no second thoughts.
Typical Freeper reaction. You aren’t concerned that thousands of Americans are losing jobs to H-1B visa foreign nationals. No that doesn’t bother you at all.
You are ignorant of my situation. Buzz off.
No one cares about YOUR situation. Nobody.
I repeat, buzz off.
Buzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
That Tim Buckley dude at Vanguard is a weasel IMO. Probably married to a Karen.
A few weeks ago he put up some “bowing-down” message regarding the deaths of previously unknown individuals. He was going on about commitment to diversity and all the things done by vanguard and money given. Etc.
I posted a notice to my vanguard contact telling him to notify Buckley that i viewed this effort as pandering, and that it was disgusting, demeaning and counter-productive. IOW it is irrelevant to the job of being a financial advisor or service provider.
BTW- I agree that vanguard has changed their model drastically. They seem to aspire to be like Fidelity and Schwab. Sad.
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