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Back-office jobs are at forefront of generating opportunities

Citi doesn’t have any bank branches in the Buffalo Niagara region. Neither does HSBC Bank USA.

But both companies are still major employers in the region. So is Geico, and Strategic Financial Solutions aspires to join their ranks as a big-time job generator.

The region has attracted a number of employers with large numbers of what are broadly referred to as back-office or advanced corporate service jobs. They are the kind of jobs that serve clients and support other employees across a broad territory, and don’t have to be in a big city like New York or Los Angeles.

Why do employers choose Buffalo for these large operations, when the jobs could theoretically be placed anywhere in the country?

The Buffalo area has advantages like a lower cost of labor and real estate, and a relatively skilled and well-educated workforce, said Isaac Ehrlich, distinguished professor of economics at the University at Buffalo’s School of Management. Plus, the region has fewer employment opportunities than larger cities, which contributes to lower employee turnover, he said.

“Competition from other sectors of the labor market is not as stiff in Buffalo,” he said. “So when people get jobs in any particular type of business operation, they tend to be stable. … As a result, there is higher productivity, and perhaps this contributes to a stronger work ethic. People don’t like to lose their jobs.”

The Buffalo area also has transitioned from a manufacturing-heavy economy to more of a mixed economy, including financial services. “The Buffalo (region) now has a larger cluster of service (operations),” Ehrlich said. “I think that that typically attracts the attention of corporations that are looking for where to locate back-office operations. The clustering helps. The same type of jobs, the same type of people, there are spillover effects that take place in a situation where clustering plays a role.”

The “spillover” effect applies to companies and workers alike, he said. Companies considering expansion can learn from other employers already in the region. And workers develop a better grasp of what the jobs involve and how to excel at them. “There is this kind of information that I think helps both employers and employees become more productive,” Ehrlich said.

Low cost can be a factor in Buffalo’s favor, since many companies want cheaper places to perform work than an expensive setting like Manhattan. An industry study said the Buffalo area fared well in that category.

The Boyd Group surveyed 50 suburban corporate back-office locations in North America, and the Buffalo metro area – specifically Orchard Park – ranked third-cheapest, at $36 million. The survey was based on the cost of running a hypothetical 125,000-square-foot back-office operation, employing 500 workers performing a series of administrative support operations. In contrast, the highest-cost area was Santa Clara County, Calif., at $47 million, or 31 percent higher than the Buffalo area.

Beyond cost, people and proximity to places like New York City, the region also has a reputation for a solid telecommunications infrastructure supporting these types of operations.

Here is a look at how some of these employers have grown in the region:

• Citi: To see the high-tech financial services hub the company operates in Getzville today, one would never guess how Citi started out here.

Back in 1976, Citi opened a 10-employee check-clearing office in Cheektowaga. In 1980, that operation moved to Ridge Lea Road in Amherst and expanded its scope of services. But it has truly boomed since moving into CrossPoint Business Park, where Citi opened a two-building complex, valued at a combined $50.5 million.

The Buffalo Citi Service Center now has 1,900 employees, including contractors. It’s not a call center – employees work in a wide range of areas that are linked to Citi operations worldwide.

With a variety of business lines inside one complex, employees can change careers within the same facility, by moving from one business segment to another. And because of Citi’s worldwide presence, employees who want to work in other countries can use the Getzville center as a springboard to those opportunities, said Anthony Vazquez, who has been the site head for almost four years.

• Geico: The insurance company keeps growing at CrossPoint, fueled partly by its automotive insurance business. The company started with 75 employees at temporary space in Amherst in 2004. Since moving into its permanent complex, the company’s workforce has grown to 3,175. And Geico plans to hire another 300 people there this year, said Mike Young, a Geico spokesman.

Gwen Appelbaum, assistant dean and director of the Career Resource Center at the UB School of Management, said companies like Citi and Geico have built relationships with local universities that go beyond simply hiring their new graduates. The companies get involved with course curriculum and class projects, as well, she said. “Because of all that, our graduates are kind of ready to hit the ground running when it comes to their talent.”

• HSBC Bank USA: The bank’s public profile changed dramatically in 2012, when it sold its upstate branch network. HSBC gave up the street-level presence of branches that customers could walk into or drive up to. And HSBC left the downtown skyscraper that used to bear its name and bowtie-shaped logo.

Despite those changes, the bank still has about 3,000 employees in the region. The workforce is split between two locations: one in Depew, the other in the Atrium in downtown Buffalo.

As HSBC has moved some jobs around the country to reduce its U.S. operating costs, some of those positions have come to the Buffalo area. Just last year, HSBC unveiled a plan to move 400 jobs out of Delaware to other locations, including Buffalo and Chicago.

HSBC Bank to relocate jobs to Buffalo from Delaware

HSBC Bank USA’s CEO has described Buffalo as appealing because of the region’s skilled workforce, and the fact that the bank already has business segments here it can build on.

• Strategic Financial Solutions: The Manhattan-based company unveiled a bold plan last year: hiring 1,500 people in Amherst within five years.

By the end of 2017, its plan was starting to take shape. Strategic Financial Solutions moved into its permanent home, on Lawrence Bell Drive in Amherst, and employed more than 30 people. It expected to double that total in early 2018, as more classes of employees were trained.

The company is not a debt-collection firm. Instead, it helps consumers consolidate debt. Its Manhattan operation has about 600 employees.

Strategic Financial Solutions chose the Buffalo area for its expansion for its low-cost, readily available labor supply, its population of millennials, and nearby universities. A local investor in the business, Jordan Levy, helped sell CEO Ryan Sasson on the region’s assets. The company is eligible for state tax breaks if it achieves its local job targets.

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