Citigroup’s decision to offshore 50 Edinburgh jobs is an ominous sign for Scotland’s investment ops industry

We’ve highlighted offshoring as a potential danger to jobs in Scotland’s investment operations sector previously. Barclays shipped some jobs to India last year, a number of other firms run operations in Poland and Hungary and now Citigroup is cutting 50 jobs in Edinburgh and relocating them to lower cost destinations.

50 jobs may not seem like a lot, but it’s still a significant proportion of the 300 people currently working for Citigroup in Edinburgh. Like other large banks, Citi has been cutting costs and announced plans to reduce headcount by 4,500 last December.

Edinburgh has, therefore, got off comparatively lightly, but it’s still a worrying trend that Scotland – which was chosen for its cost benefits – is no longer deemed cheap enough for a number lower end investment ops roles. Citigroup had already stripped out transactional functions from its Edinburgh office to focus on fund accounting, so the fact that it’s embraced offshoring further should set some pulses racing north of the border.

“Citi will work closely with the affected employees, including exploring transitions to other roles within the bank. Citi remains committed to doing business in Scotland,” the bank told the Herald in a statement.

This year has not been a good one for people working in investment operations. In 2011, there was something of a mini recruitment boom, with most firms north of the border bolstering their ranks.

However, since the Eurozone crisis has forced many investment banks and global custodians to downsize, there’s been hiring freezes across most major players in Scotland and growing disgruntlement among the ranks.

As one senior manager told us: “As soon as one firm starts hiring a number of investment operations firms will face a retention problem. We’re being forced to work longer hours, sometimes weekends, yet pay has not increased and most people have had no bonuses for the best part of three years.”