EDS says sayonara to 5,200 jobs

IT World Canada

Plano, Tex.-based computer services firm EDS Corp. announced plans Wednesday to chop 5,200 jobs – four per cent of its worldwide workforce – by the end of 2004, as part of an overarching restructuring plan that includes service consolidation.

The cuts include the 2,700 positions the company terminated in June. EDS said the move will save the company US$330 million to US$360 million per year – an increase of US$100 million from prior estimates. [Please see EDS to restructure, lay off two per cent of staff ]

Stephen Heckbert, spokesperson for EDS Canada in Ottawa, said that most of the layoffs will take place in Europe and the U.S. and not in Canada, because EDS faces stiffer competition in the U.S. and European markets. In addition, he said EDS has been growing its Canadian operations over the past year with its Best Shore initiative – EDS’s strategy to find companies the best location in the world for specific operations.

Heckbert said Canada is a prime location for U.S. companies looking to outsource because of the country’s cost competitive nature and because it operates in the same time zones.

In 2003, EDS added 500 new jobs in Canada and recently announced it signed $100 million worth of contracts in Canada. These include a contract renewal with British Columbia’s Provincial Learning Network (PLNet) to continue providing support; an agreement with Manitoba to extend desktop management services; and a variety of agreements with government agencies and corporate agencies in Saskatchewan, Alberta and Ontario varying from desktop support to application development services.

EDS currently employs about 7,200 people in Canada and has yearly revenues of about $1.25 billion.

Jason Bremner, senior analyst, outsourcing services at IDC Canada Ltd. in Toronto, said EDS is a stable player in the Canadian market. With annual revenues of $1.25 billion it is the third largest player in the $16 billion Canadian IT Services market after IBM Global Services with $2.8 billion, and CGI Group Inc., with $1.5 billion. Hewlett-Packard Canada Services holds the fourth spot with $575 million. He said companies that play in the IT services field generally lay people off periodically through attrition – as they start to streamline their services for new clients. He said this is the normal ebb and flow of the outsourcing business and that EDS’s competitors such as IBM Global Services, CGI, HP Services and Accenture would also likely cut their workforces similarly.

EDS Canada is headquartered in Toronto. For more information visit www.eds.com/canada