Financial services giant Citigroup’s announcement of 52,000 job losses is certain to affect many IT staff.

The company’s latest round comes on top of the 17,000 cuts that the company has already made in the first three fiscal quarters of this year.

The goal now is to pare down the workforce from its current level of 352,000 to about 300,000 employees worldwide, Citigroup CEO Vikram Pandit said in an investor presentation (PDF) posted on the company's web site today.

About half of the reduction will come as Citigroup sells off its non-strategic businesses, and the rest will come from layoffs that either already have been announced or are being planned, Citigroup said.

"We entered 2008 with more people, more businesses and more assets than fit our strategy," Pandit said in the presentation. "We expect near-term headcount to be down 20 per cent in order to run the company in the right way."

No details have been released yet on where the job cuts will come from, or what job functions might be most affected. But TowerGroup analyst Guillermo Kopp said to expect a fair share of them to involve IT functions.

Citigroup has already announced plans for major cost cutting in its multi-billion dollar 25,000 person IT organisation. Last year, before Pandit became CEO, Citigroup said announced a datacentre consolidation programme and plans to better use existing technologies, optimise global voice and data networks, standardise its application development processes, and consolidate vendors.

"Simplification and standardisation of the Citi information technology platform will be critical to increase efficiency and drive lower costs as well as decrease time to market," the company said in April 2007 when it reduced headcount by 17,000 employees .

That IT cost-reduction focus appears to have sharpened under Pandit. In an investor and analyst briefing in May of this year, senior Citigroup executives told analysts the company hoped to trim at least $3.0 billion in operations and IT expenses over the next three years.

About $1.5 billion of that was expected to come directly from IT costs reductions through centralisation of IT operations and the elimination of duplicate technologies. The organisation currently uses 16 separate database technologies, for example.

Marty Lippert, a former technology executive at the Royal Bank of Canada who in July was appointed CIO at Citicorp, is leading the transformational efforts at Citigroup's new centralised Global Technology and Operations division.

TowerGroup's Kopp said to also expect to see Citigroup seek headcount reductions by selling off and outsourcing IT operations where it can.

He pointed to the Citigroup sale in October of its Citigroup Global Services arm in India to Tata Consultancy Services for $505 million as an example. As part of the deal, Tata will provide process outsourcing services to Citigroup under a nine-year contract valued at $2.5 billion.

For Citigroup, the latest cuts are about improving operational efficiencies by "returning the company to its core competencies," Kopp said.

In the process though, Citigroup appears to be taking a sharply different approach than its main rival JP Morgan Chase , he said. Whereas JP Morgan has been trying to use technology to gain a competitive edge, the immediate focus at Citigroup appears to be retrenching to cut costs, he said.

"It's a bit paradoxical. For many years Citigroup was seen as a leader in technology," Kopp said.

"The overarching goal should be efficiency," Kopp said. "That can only happen when you do a deeper transformation of the business and by modernisation of the technology platform."

What appears to be happening at Citi is the exact opposite, Kopp said. "It is about using the axe and cutting any development or investments" in technology out of necessity and not because it will help improve efficiency, he said.

"It may look like reducing expenses but that doesn't necessarily mean that productivity and the efficiency in the company will see any quantum improvements," Kopp said.

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