As payment processing giant Fiserv sheds more workers, analysts will be closely watching the company’s severance costs when it reports third-quarter earnings results next week.
Fiserv Spokesperson Ann Cave has acknowledged recent cuts, but will not comment on the number of workers dismissed, or the company locations affected.
Cave maintained, as she has in the past, that the company’s total global employee count is “about 44,000” and she would not share current figures for employees inside, or outside the U.S. She also reiterated that the company has 18,000 employees outside the U.S.
Ken Suchoski, equity research analyst with Autonomous Research, said in an Oct. 17 email that he’ll pay attention to any commentary on employee cuts during Fiserv’s Oct. 27 conference call.
Fiserv is among the many companies that have trimmed their workforces in recent months, as businesses have been challenged by higher operating expenses and macro-economic headwinds. In July, Fiserv executives cut the profit margin expansion they had expected for the year.
“We’re looking to see how they can manage cost inflation and how that impacts margins of the business,” Suchoski said in the email. “If they are just cutting people to control costs, then it could impact the go-forward growth of the business.”
Suchoski said he’s also looking at which business segments Fiserv is making cuts in. The company’s merchant business “is growing the fastest and will become a bigger part of the business over time (i.e. Clover helping to drive growth) so I’d expect them to continue investing there,” he said in an email.
Another analyst, David Koning, with Baird Equity Research, said by email that he watches severance expenses “both because adding back a lot of costs is low quality earnings, and because it is an interesting situation if they are cutting a lot of people.”
“Investors do get a little nervous when companies have a difficult culture, or have to cut a ton of costs” to hit their numbers, Koning added in the email today.
Former employees have told Payments Dive the company is shifting away from remote work as the COVID-19 pandemic has ebbed, and paring workers who don’t live near central offices. Fiserv told a New Jersey state agency last year that it has closed about 100 U.S. office locations since its 2019 acquisition of First Data.
At the same time, Fiserv has bolstered its presence in Berkeley Heights, New Jersey, where it’s built a new campus housing mostly tech jobs.
Cave said the company has “executed a gradual return to office” coming out of the pandemic, “and updated our work policy accordingly. Our in-office associates are asked to be in the office the majority of the time.”
Fiserv has “a hybrid approach to work, which includes in-office, remote and ‘work from road’ (high travel) roles,” Cave said in an email. “Depending on the role, we may offer associates who work remotely the opportunity to relocate to a Fiserv location.” Employees who are offered relocation options, and the relocation locations vary widely, she said.
That Berkeley Heights, New Jersey location has been the main beneficiary of relocations. On Friday, Cave said the company has “recently started moving associates into the new campus in Berkeley Heights.”
As it sought to develop a new office location, Fiserv was granted a tax credit award in September 2021 by the board of the New Jersey Economic Development Authority, providing the company with $109.2 million in tax credits over seven years.
A spokesperson for the New Jersey Economic Development Authority said today the agency had no comment. Berkeley Heights Mayor Angie Devanney didn’t respond to multiple requests for comment and, through the township clerk on Monday, deferred to Fiserv for comment.
That tax credit award was “a material factor” in Fiserv’s decision to develop the campus in New Jersey, as opposed to Alpharetta, Georgia, where the company also has an office location, Cecilia Lassiter, an attorney for Fiserv with law firm Sills Cummis & Gross, said during an Oct. 19, 2021 meeting of the Berkeley Heights township council.
For its part, Fiserv agreed to create 1,927 new jobs and retain 1,063 jobs in New Jersey, Lassiter said during that meeting.
A community benefit agreement, signed by representatives of Fiserv, the township and the New Jersey EDA in February and March 2022 stipulates Fiserv give the township $150,000 for a park development project.
At the council meeting last year, Devanney called that amount “a significant infusion of funds to get the project started.” Fiserv can take 11 years to provide the funding for the park, but Fiserv CEO “Frank [Bisignano] is interested in trying to do it all up front,” she said during that meeting.
During negotiations, the township also got an additional $10,000 toward the township’s Christmas tree in Veterans Memorial Park, Devanney said at that meeting.
Aside from the park funding, codified in the agreement, Devanney noted at the meeting last year that Fiserv will create “medium- and high-paying jobs” in the township. “I hope that our community will be able to take advantage of those openings,” she said then.
Cave declined to comment on the number of Fiserv jobs that have been created in the area so far under the agreement. Devanney didn't respond to a question asking for that figure.
The company has three years to create the jobs, with two possible six-month extensions, Lassiter noted during that meeting. Fiserv had said the jobs created would have an annual salary exceeding $92,000, she noted.