EDS shows one in four staff the door EDS is offering a quarter of its US staff early retirement as it seeks to move more and more of its operations to cheaper territories. The outsourcing specialist is offering 12,000 people extra benefits if they take early retirement. Staff have until 30 October to accept or decline the offer. EDS shares fell just over two …
Well if they're as lucky in the US as we are in the UK, they'll have been offered all kinds of exciting pension options. Yes, I received my exciting EDS pension pack yesterday. Never has the choice between low-risk/low-yield and high-risk/high-yield been so grippingly exciting. You know, it was so exciting I almost wet myself before realising that in the year it took before they finally admitted they didn't have any work for me, my pension fund was worth a less-than-exciting £2.78.
I was intrigued to see that the job refocussing and realignment led to a prediction of reduced revenue.
Then I looked at the figures again.
Assume that the 12,000 job reductions result in $120,000,000 loss of revenue.
This (according to my usually dodgy arithmentic) means a loss of $10,000 revenue per person.
I conclude that US based old buffers gross on average about $10,000 per head per quarter, or $40,000 p.a. for the company.
Unless they are paid a very low wage, they must be losing the company money.
Pension them off, I say!
Well, I agree with it challenging the value for money customers getting but not because of non-native English speaking IT people: if you can't understand what they're saying then obviously the *wrong* non-native English speakers have been hired as I know plenty of non-native English speakers who's English is better then that of several native speakers I know ;).
It always strikes me as odd that an organization fires, in this case, 1/4 of their staff and apparently expects customers to just take the collateral damage that will be caused as internal informal networks where 'things get done' disappear overnight, where you can expect an increase in sickness (overloaded people). Such a bloodletting will inevitably cause a major disruption in day-to-day operations and it's the customer who will suffer.
57,000 in the US. 12,000 shown the door, or at least shown where the door could be if they want to go through it.
12,000 / 57,000 = 0.21
Isn't that much closer to a fifth than a quarter? I hope I never send you to my drug dealer to get a quarter of his finest homegrown weed, I'm likely to be short changed...
I know in an attempt to be dramatic, that they use phrases like 'show 1 in 4 the door', but the reality of this will be far different (and the title makes people think it's a layoff which it's not). In past times, when they've offered people early retirement, only a relatively small percentage have taken them up on it. I would be surprised if more than 1/3 of the people accepted it. The last one, I believe was accepted by something like 1 in 10, although that was the result of a less well-funded retirement offer. They have a real target number that they're looking for, and from historical data they know roughly how well they have to fund it and how many people they have to offer it to, so they can hit that target.
The person trying to determine salaries from the revenue loss is way off. They have some model which they use to create that number. Some positions will be replaced by other (less expensive) people in the US, some off-shored, some 'sucked up' by the existing team if their manager can't justify the backfill. Also, while some percentage of the positions receive revenue directly through headcount, many receive revenue by service, and some are through various other calculations. So, trying to derive peoples' salaries through this number gives you a meaningless figure.
To answer Jan's post, they will know ahead of time how many positions they're losing in each area, and will take steps if necessary to bring people on to backfill just ahead of the early-retirement folks. It's up to the local manager to determine if it's necessary and push to make it happen.
To answer the first post, EDS China is exceedingly small at this time, and they are more focused on other countries.
Sorry for deflating the 'drama bubble' here :)
Also you will note they state that it's lowered earnings (ie profit). So while part of it is less revenue, a vast majority of that is the $10,000 per person who actually accepts plus whatever extra they have to dump into the pension plan. If 4,000 people actually accept it, that would be $40mil + millions extra to cover the year of pension benefits paid to the plan. The 'millions extra' amounts obviously would vary by person, I can see 25-75% more from that, so you're already nearing the bottom range of their earnings loss figure without any revenue loss figured in.
EDS is just doing what you do in a global economy... moving to cheaper production areas.. they actually have no choice.
The question is if you can get a 27 year old first class honours degree student, with an MBA, in Brazil for £5k a year, who is prepared to work 10 hours a day for 6 days a week... how much would the same cost in London? You can argue about quality and all of those good things but you would probably pay 10 times that for someone! Big Blue is starting to recruit heavily in India.... they wanted 1000 staff... they got 1,000,000 applicants all with degrees and relevant experience in IT... prepared to work for what would be considered the minimum wage in the UK.
If you do not have a job which is customer facing or really need to be employed in the UK.... your job will probably go in the next 5 years!
Sobering thoughts......
When Keane dumped its senior and midrange U.S. staff a few years back, they didn't give anyone an early retirement option, just a few weeks' severance (max 12 weeks) and the ability to go on unemployment for 6 months. There are no longer any pensions to speak of in the U.S., just your 401K. And there were not a lot of jobs available either, what with off-shoring, down-sizing, and age discrimination.
EDS has been, I hear, a lousy company to work for, but at least they are "offering" something when dumping their most expensive (and loyal) employees.
As techies are not unionised, we have NO bargaining power. We have the power to beg and be offered, that is all.
I'm not bitter, really; working for half my old rate in the non-profit sector, like many of my colleagues, I am also atoning for all the time I spent creating lovely stuff for banks! But I am, fortunately, not trying to put kids through college (also not free in the U.S.).
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