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Outsourcing vendor to move 'higher-level' IT jobs offshore

Patrick Thibodeau | Nov. 5, 2008
Vendor plans to increase the number of employees working offshore by 4,200 during its current fiscal year, which began July.

An ACS spokesman said it's too early to know whether the company's new offshoring moves will lead to layoffs of U.S. workers. The IT services firm's business continues to expand, he pointed out. But slide 19 of the conference call presentation says that ACS is estimating US$38 to $42 million in "severance/transition" expenses as a result of the increased offshore activity, with as much as $25 million of that total expected to come during the company's ongoing second fiscal quarter.

ACS, which reported $6.16 billion in revenue for its 2008 fiscal year, does a significant amount of IT work for government agencies: about 40% of its business comes from government contracts. But most of the offshore work is being done for corporate clients, according to the ACS spokesman. The company has more flexibility to move corporate work offshore than government contracts often allow, he said.

In a separate move, pharmaceutical maker Pfizer Inc. detailed cost-reduction strategies in an earnings call last month and said it had "a wide array of outsourcing opportunities in various stages of implementation." That included projects within its manufacturing, logistics, finance, facilities, legal and IT departments, according to a transcript of the call posted on the Seeking Alpha site.

Citing unidentified sources, The Day , a newspaper in New London, Conn., Tuesday reported that over the past few months, Pfizer has been training foreign workers at facilities in New London and Groton, Conn., in preparation for transferring much of its IT work from locally employed contractors to outside firms.

A Pfizer spokeswoman said the company wouldn't comment about the Day 's story. In regard to Pfizer's use of contract workers, the company said via e-mail that the number of its temporary workers "ebbs and flows." For instance, Pfizer said that on an average day, it has 800 to 1,000 contract workers at its sites in Groton and New London, in addition to the 5,400 company employees there. The contractors provide services "ranging from janitorial and cafeteria services to clerical and technical work," Pfizer said.

 

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