US student loan provider SLM Corp, commonly known as Sallie Mae, plans to bring 2,000 jobs back to the US.
US student loan provider SLM Corp, commonly known as Sallie Mae, plans to bring 2,000 jobs back to the US as it shifts call centre and IT operations from overseas.
A spokeswoman said on Monday that the company will transfer hundreds of jobs from India and the Philippines and a few dozen from Mexico to the US.
India will face the brunt of the “reverse outsourcing” as Sallie Mae runs its biggest call centre and offshore loan processing operation out of Pune and Bangalore. It has smaller operations in the Philippines and Mexico. The jobs shift will cost the firm approximately $35 million a year.
Analysts said the move marks a turnaround for Sallie Mae, which two years ago was faced with the need to slash costs.
“We were at the point where we couldn’t make a student loan at a profit,” chief executive Albert L Lord said during a conference call. “The company had to re-engineer itself. It had to cut jobs and move jobs. At least that’s how we felt at the time,” he said.
In late-2007 and early 2008, Sallie Mae sent thousands of jobs to places like Pune and Bangalore as part of a plan to save $300 million. In its annual report for 2008, Sallie Mae said it cut operating expenses by more than 20% in the fourth quarter of 2008, compared with the same quarter in 2007.
But the recession has thrown outsourcing into convulsions.
There are two big worries for India: Will Wall Street and financial firms like Sallie Mae be sending much less business India’s way given the sharp contraction in financial services, and will a more protectionist, populist attitude in Washington hurt India Inc?
Some analysts called Sallie Mae’s plan a bid to build “political capital” in Washington as the Obama administration plots major changes to the student loan market.
Reuters reported the Obama administration has proposed a 2010 budget that could hurt Sallie Mae’s business by shifting all federal student loans into a program administered by the Department of Education.
Quite obviously, creating badly-needed jobs in America is one way of gaining goodwill on Capitol Hill.
“The current economic environment has caused our communities to struggle with job losses,” said Lord. “They need jobs, and we will put 2,000 of them into US facilities within the next 18 months.”
Sallie Mae’s move drew applause from US lawmakers.“It’s a patriotic act,” said Paul E Kanjorski, whose Wilkes-Barre district will receive 600 new Sallie Mae jobs, doubling the number of company employees at that location. “It sends a great message to corporate America to think as deeply as you can.”
Lord said, “It was a tough decision to move these jobs overseas. It was a lot easier to make the decision to bring them back.”
Sallie Mae manages about $180 billion in student loans for some 10 million students.
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