Sears Canada moves IT jobs abroad

Sears Canada said it is letting go of 245 employees from its head office and will outsource most of its IT application development jobs abroad.
Sear’s announcement comes at a time when other retailers in the country are cutting staff and shutting down stores. For instance, in January this year some 900 lost their jobs when eight Future Shop and seven Best Buy big box stores were shuttered. At about the same time Sears Canada let go 700 workers.

Outsourcing IT work struck a sour chord with many Canadians earlier this year when it was learned that the Royal Bank of Canada had hired India-based recruitment firm iGate Corp., to provide workers to replace 45 IT workers the bank had in Toronto.

Vincent Power, the company’s vice-president of communications for Sears, said the 138 IT workers mainly did application and development work. That work has now been picked up by IBM, he said, and most of it will go to the Philippines. Sears Canada still maintains hundreds of IT workers in its data centres here, Power added.
Sears’ annual revenue is around $5 billion but has had a number of unprofitable quarters. The retailer employs 29,000 associates and has 118 department stores across the country, down from 197 a year ago.  
Staff affected were given layoff notices Monday, in advance of today’s release of the company’s unaudited second quarter results showing revenue of $960 million, down 9.6 per cent compared to the same period a year ago. Net earnings were $152.8 million. However, that included certain one-time pre- and after-tax gains. Excluding those there was an $11.2 million loss for the quarter.  

Sears Canada has been in financial trouble for some time and the company is in the middle of a three year restructuring. For the first half of the year total revenue was $1.8 billion, a drop of 8.2 per cent compared to the same period in 2012. Net loss for the first half of this year – excluding tax gains – was $42 million compared to a net loss in the first half last year of $54.7 million.

IT is not Sear’s “core business” and so the company is “leaving it to people we feel can do it more efficiently,” Powel was quoted in the Toronto Star.

He said the move is meant to improve the efficiency in the company’s IT services and Sear’s suppliers, which include IBM Corp., will move some of the work abroad.

For instance, IT work will be transferred to the Philippines while finance and payroll will be handled in India

“That’s their business model,” Powell said.

Outsourcing is a multi-billion dollar industry and many Canadian companies are taking advantage of the benefits it provides, according to analyst firm IDC.

IDC’s Outsourcing Monitor for June 2012 said outsourcing revenues grew to more than $15 billion last year.

As many as six out of 10 Canadian business resort to outsourcing in order to cut cost, according to IDC. Employers save on average as much as 35 per cent from outsourcing.


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