Alistair MacDonald and Anshuman Daga

LONDON: Bank of America is to take emerging markets outsourcing one step further with plans to set up an Indian subsidiary next year, enabling it to cut costs by moving more jobs offshore.

The bank, which has already outsourced a number of jobs to emerging markets, will set up a subsidiary in India next April, spokeswoman Elizabeth Wood said on Monday.

"It will help provide faster, high quality, less expensive solutions to our customers," she said.

Industry sources said BoA has recently been recruiting IT staff in Bangalore, India's technology capital. Sources said the bank is close to finalising a decision on where it will base the new unit.

BoA is already among the biggest clients of Indian IT companies such as Tata Consultancy Services and Infosys Technologies Ltd, India's number one and two software exporters, analysts said.

The move will mean some job losses from BoA's global operations. However, employees will have to wait to find out if their jobs are at risk, as BoA says it has not yet decided exactly which functions will be moved to India.

BoA has already faced protests over decisions to outsource jobs abroad. Yet analysts say that two thirds of U.S. banks now outsource work to developing countries such as India, China and Russia.

In Europe, HSBC, ABN AMRO and Deutsche Bank have been among the companies to shift work abroad.

Western banks have outsourced IT work, human resources work, securities back office processing and some research abroad.

BoA, which is set to report third-quarter earnings on Tuesday, has chosen to use a subsidiary rather than outsource work to other firms because it offers greater protection of the company's intellectual property, said Wood.

"India was chosen because it is a leader in information technology and processing and has a large English-speaking workforce and good infrastructure," she added.

In November or December of this year Bank of America will also combine two of its London offices at a new location at Canary Wharf in east London.

The bank will keep its operations in Bromley and Croydon, both south of London.

© Reuters