The Recurring Cost of Human Capital

Phil Windley pointed to this Baseline magazine article on “in-sourced” their information technology operations: “Why JP Morgan Chase Really Dropped IBM“. After the merger of BankOne and Chase, Chase brought IT functions back in-house. BankOne’s cost savings boil down to salaries.

For further comparison, the average compensation of a Bank One employee in 2003 was $66,928; a JP Morgan Chase employee took home $125,147. Returns on shareholder equity also were materially higher for Bank One.

Chemical’s Chase’s operations are in the New York metropolitan area; BankOne’s aren’t. Though if Chase’s current operations are anything like they were when I was there in 1993, it wouldn’t be too hard to improve on them.