Electronic Data Systems plans to cut 15,000 to 20,000 jobs during the next two years, as the struggling technology services giant tries to slash costs and regain its footing.
EDS chief executive officer Michael Jordan provided that estimate of job cuts on Thursday, said company spokesman Kevin Lightfoot. "That number can be modified," Lightfoot said. It is "really dependent on how well we transform the business".
The firm has about 122,000 employees. It has already cut about 5,000 employees in the past year or so, Lightfoot said. The company is working to trim its annual costs by $3bn through steps including workforce cuts, office consolidation and reduced supply expenses.
EDS has been beset by challenges, including a recent downgrade by Moody's Investors Service of EDS debt to "junk" status, losses from a massive and troubled contract with the US Navy and an ongoing probe by the US Securities and Exchange Commission.
The probe covers topics including EDS stock-hedging efforts and the events leading up to its earnings warning for the third quarter of 2002. In addition, the SEC has requested documents related to the Navy contract.
EDS would have posted a net loss for the second quarter this year if not for the sale of a software division.
EDS ousted its former chief executive last year. The company brought in former CBS chief Jordan and has been focusing on its core services of application management, information technology outsourcing, and so-called business process outsourcing. Outsourcing refers to farming out tasks like data centre management.
Talkback
I was a senior technician at Motorola when they outsourced the IT department to EDS. Prior to the outsourcing, if a department had money to spend and needed to impliment a new process or upgrade technology, I tried my damnedest to get it done right, with one request of service.
A technician's job is to ask "How do you use YOUR computer?" and set it up the best for your individual needs. PC means Personal Computer. When your company outsources to EDS you now have a COW - Company Owned Workstation and the desktop is locked down to a standard configuration and can not be changed.
With EDS when a trouble ticket comes in and a technician is dispatched to the desktop, they can not do any additional work other than what is on the workorder without having the customer call in and request the work to be done and it is approved.
It is very degrading to a technician not to be able to fix problems when they are found and have to wait for approval and then have to reallocate time to come back to fix something that might have taken ten minutes extra on the first call has now taken days.
No employee that I know that has been assimilated into the EDS outsourcing process is happy about the change and mearly accepts the change because they want to continue to have a paycheck.
When a company has enough business and equipment to employe EDS they might do so because the think their focus on business should not be on IT but on their primary business but it is technology that is enabling them to do the business they provide and should not be taken for granted that anyone can manage their needs better than themselves.