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K. Ram Kumar

Mumbai, Dec 5 Bankers want to reduce costs while trade unions want to save jobs. So, will the twain meet on the issue of outsourcing?

That depends on who blinks first. The 9th bipartite wage settlement talks between the nine unions and the Indian Banks’ Association’s Negotiating Committee, according to sources familiar with the negotiations, is likely to lead to a tug of war on the issue of outsourcing in public sector banks (PSBs).

According to the union representatives, the last bipartite wage settlement talks did not allow outsourcing other than in specialist IT jobs. The IBA’s Negotiating Committee, however, is of the view that “enlarging the scope of outsourcing is an agenda during the current negotiations.”

“To put it plainly, one man’s meat is another man’s poison. Bankers want to reduce costs while unions want to save jobs,” said a senior functionary with one of the leading employee unions. Besides, wage hike, one more option for pension, and improved service conditions for around seven lakh bank employees, the wage settlement talks will also tackle the issue of outsourcing issue head-on, he added.

A senior banker familiar with the negotiating committee’s stance said, “The banking regulator has clearly issued guidelines on managing risks and code of conduct in outsourcing financial services by banks. Our talks on outsourcing will be held within this framework. There will be no retrenchment on account of outsourcing.”

The key drivers for outsourcing, as identified by PSB managements, are cost reduction, value creation, and competitive advantage. The key drivers include increasing customer expectations, business growth, tapping new avenues of business, intensified competition, profitability, cost reduction, optimal utilisation of existing manpower, increased productivity, achieving economies of scale by covering more customers with existing infrastructure, providing door step services to customers such as collecting/ delivering cash, cheque books, etc.

Unions have taken the stand that outsourcing of jobs of permanent nature should not be done. Bank managements, however, are of the view that non-core functions such as those related to IT, marketing, maintenance and upkeep and security could be outsourced while core management functions such as internal auditing, management of investment portfolio, compliance and decision making functions such as determining compliance with ‘Know your customer’, and according sanction for loans would not be outsourced.

While unions have expressed concern that data pertaining to customers could be misused by a third party, the banker pointed out that banks will have a security policy in place, having regard to the guidelines issued by the regulator.

The banker sought to allay concerns regarding reduction in staff strength by stating that with financial inclusion, more and more people would be associated with the banking sector and this is unlikely to result in reduction in staff strength. The IBA, the apex body of 150 banks in India, is expected to resume the ninth bipartite negotiations with the United Forum of Bank Unions, the umbrella organisation of nine banks trade unions, in mid-December 2008.

The unions have sought around 35 per cent hike in wages in view of the fact that banks have posted healthy profits over the last few years.

In the eighth bipartite wage settlement talks, the union pressed for a similar hike but settled for a 13.25 per cent hike.

More Stories on : Trade & Labour Unions | Outsourcing | Banking

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