On Thursday (June 5), American financial giant Citigroup Inc. announced its plan to lay off about 3,500 information technology (IT) employees in China, primarily focused at the “China Citi Solution Centres” in Shanghai and Dalian. The layoffs are expected to be completed by early in the fourth quarter of this year.
Citigroup stated that the affected positions mainly include IT service roles such as software development, testing, system maintenance, and operational support, which have long supported its global business. Some positions will be transferred to other country technology centers, but specific locations and numbers were not disclosed.
This round of layoffs is part of Citigroup’s global restructuring plan launched in early 2023, aimed at simplifying the organizational structure, reducing costs, and improving operational efficiency. The plan is expected to cut around 20,000 employees globally, accounting for 10% of the total workforce, and close or downsize some regional offices.
In March of this year, Citigroup was fined a hefty amount by US regulatory agencies due to data governance and internal control issues. To strengthen risk control and compliance capabilities, Citigroup decided to reduce its reliance on outsourcing IT manpower and instead directly hire full-time employees. In mid-last month, Citigroup had already laid off about 200 IT outsourcing personnel in China.
Despite the workforce adjustments in the technology sector, Citigroup’s overall operations in China will continue. It is projected that after the layoffs, the total number of employees in China will decrease to around 2,000, with hundreds still continuing to work in the technology department.
Marc Luet, Citigroup’s Asia-Pacific head, told the media that Citigroup will continue to promote the establishment of wholly-owned securities and futures companies in China and focus on serving local and cross-border corporate clients, expanding its business footprint in China.
In addition to Citigroup, several international banks have also initiated restructuring and layoffs. Hang Seng Bank recently announced a reduction of about 1% of its core business staff; JPMorgan Chase, Bank of America, among others, are also undergoing workforce adjustments. Bank of America had laid off about 150 people in its investment banking department earlier this year.
Meanwhile, multinational companies’ confidence in the Chinese market is also facing challenges. Tensions between China and the US, weakened domestic demand, and intensified local competition have led some companies to reassess their presence in China. The latest surveys by the “US-China Business Council” and the European Chamber of Commerce show that the willingness of companies to shift manufacturing and supply chains out of China continues to rise.
Since the beginning of this year, many foreign companies have also announced layoff plans in China. French beauty brand L’Oréal reportedly plans significant cuts in travel retail personnel in April; and German automaker Mercedes-Benz also reportedly plans to lay off about 15% of its employees in China, affecting approximately 2,000 people, covering sales and finance departments.
Citigroup’s current round of layoffs is not only part of its global restructuring but also reflects the structural challenges foreign banks face in China. Faced with economic slowdown, tightened regulations, and geopolitical risks, most multinational financial institutions are adjusting their strategies in China to improve efficiency and risk management.
(This article references relevant reports from Reuters and CNBC)