Despite announcing plans to axe some 2,700 jobs across the world, EDS is planning to invest in software application development and call centre support in Dublin as part of its Best Shore initiative aimed at cutting costs.
Yesterday, EDS, one of the world’s biggest IT services firms, announced plans to axe 2,700 jobs as part of a major restructuring. The news came on the heels of news that revenues for the current quarter were likely to come in around US$5.4bn. The restructuring of the company is expected to cost up to US$475m. Last month, the company announced losses in the region of US$126m, down from a profit of US$354m a year ago, as business is understood to have fallen off by two-thirds.
As part of the restructuring, EDS, which employs 400 people in Dublin in handling major e-government outsourcing contracts, said that it will eliminate redundant functions and duplicative processes in selling, general and administrative costs in a move that will ultimately generate an annual pre-tax saving of $230m.
While it was unclear how the restructuring would affect EDS’s existing Dublin staff, the company said that as part of the move to improve its cost position, the company will continue to invest in its Best Shore initiative, which will see it locate software application development and call centre support resources in “cost-effective” locations around the world, including Ireland.
Ireland was listed along with countries such as Egypt, New Zealand, Canada, Brazil, Poland and Brazil. EDS already manages 16 such Best Shore centres around the world, including a recently opened 500-seat contact centre in India.
“In the remainder of 2003, we are stabilising and beginning to restructure our core business,” said chief financial officer Bob Swan. “We expect to finalise that work next year and have EDS positioned for sustained growth thereafter.”
EDS ended the first quarter of this year with US$1.5bn in cash on hand. It anticipates ending 2003 with between US$1.4bn and US$1.7bn in cash on hand and up to US$700m in capital markets financing.
A spokesperson from the Irish operation of EDS could not be reached to state what impact the job cuts would have on the existing staff in Dublin or what job creation prospects the decision to invest in call centre or software development in Dublin would have.
By John Kennedy