Vanguard has a history of farming some tech jobs and other positions out to contractors, who have recruited and operated, sometimes from Vanguard buildings, sometimes from other locations.
Vanguard has said that using contractors, for example in times of financial stress such as a recession, can enable the company to operate with minimal disruption by reducing workforce without mass firings of its own staff, as happens cyclically at Wall Street banks and other financial employers.
Last year the company hired an arm of the Swiss post office to do mass mailings from the Swiss Post's sprawling private mail facility in El Paso, Texas.
Here's how Vanguard and Infosys say they are splitting the work:
Infosys "will assume day-to-day operations supporting Vanguard's (direct contribution plan) record-keeping business," including software and administration, Vanguard said in its statement.
Vanguard salespeople will continue to call on clients and prospects, design plans, manage investments, and sell advisory services to plan members. This earns Vanguard an additional fee that helps boost the company's revenues at a time when investment managers are under pressure to cut their retirement and money-management fees.
Together the companies will set up a "cloud-based recordkeeping program," add analytics and collect data on plan members' behavior, and support operations.
Both Vanguard and Infosys will handle phone inquiries. That is an area of large potential cost-cutting, for example if Infosys moves phone services to its operations in low-cost India, said Dan Wiener, a New York investment adviser who publishes the Independent Adviser for Vanguard Investors newsletter.
Wiener said King has experience cutting expenses. Vanguard prides itself on driving down fees so it can charge customers less. The privately held, for-profit company does not disclose what it pays executives or spends on marketing.
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