While the rest of Wall Street has been slashing jobs to cut costs, Goldman Sachs has been hiring. Its employee base has grown 10% over the past two years.
To be sure, three-quarters of Goldman’s recent staff additions came in places nowhere near Wall Street, but rather “in places like Bangalore and Salt Lake City,” Goldman CFO Harvey Schwartz told analysts on the bank’s second-quarter earnings call. (The bank, hit by soaring legal costs and weak trading profits, reported its smallest quarterly profit in four years; its $916 million in profit was down from $1.95 billion in last year’s second quarter.)
Much of the hiring has been in areas related to compliance, given the increase in bank regulations, as well as growth in the firm’s private wealth-management and asset-management businesses, Schwartz said. And much of the hiring comes under what the firm calls its “high-value location strategy,” which president and COO Gary Cohn explained in a 2012 investor presentation:
“This is an effort to build operational excellence outside of our traditional hubs in New York, London, Tokyo and Hong Kong,” he said. “These cities, which include Bangalore, Salt Lake City, Dallas, and Singapore, now represent 19% of our headcount and allow the firm to access a broader, highly qualified talent pool. As a result, we are able to attract highly skilled professionals at wages that are attractive for both the firm and our employees in these locations.”
Because of the lower cost of living in these locations, expenses for the bank can be 40% to 75% less than they would be elsewhere.