Thread: EDS' speedy growth overseas offsetting layoffs

I cannot thank my friend enough for sending me this articles. I don't know about any of you, but I certainly have NOT seen any cheaper prices due to cheap labor. It is the CORPORATIONS that are profiting from this on both ends while we get screwed!


Does this indicate more housing foreclosures - higher unemployment - more commercial space available as the square footage won't be needed on American soil if the bodies doing the work are in a foreign land. That means less tax revenue as well so taxes will have to be increased to make up for that loss.
This is the BUSH ECONOMY AT WORK - The *growth* in American slaves - who will do anything for some food and a NAFTA HIGHWAY overpass to sleep under.


http://www.dallasnews.com/sharedcontent ... a55d3.html


EDS' speedy growth overseas offsetting layoffs



10:00 AM CDT on Tuesday, August 22, 2006
By CRAYTON HARRISON / The Dallas Morning News

When Electronic Data Systems Corp. announced up to 20,000 layoffs in 2004, it had about 120,000 workers. That's roughly the same total it has today, with the layoffs more than halfway complete.

How did that happen?

The Plano-based computer services firm has been hiring as rapidly as it has been firing, filling up office complexes in India and China while it lays off workers in more expensive locales such as the U.S. and Western Europe.

MICHAEL HOGUE/DMN

In North Texas, EDS has about 7,400 workers, down from 7,700 in 2004.

Offshore outsourcing is old news, but the sheer speed of EDS' conversion into a truly global workforce is mind-boggling.

By 2008, EDS expects to have tripled its offshore labor force to about 45,000 while keeping its overall head count about even, all in the span of about three years.

Executives feel they have to move so quickly because customers want to take advantage of the lower cost of offshore labor.

But hiring so many so quickly, while still trying to choose quality people, is a daunting task.

"It's a global world, and we're playing in it," said Steve Heidt, an EDS vice president.

EDS certainly isn't alone in its push offshore.

Its top rival, IBM Corp., has increased staff in India to 43,000 from 9,000 in the last three years, thanks in part to an acquisition. Accenture Ltd., Hewlett-Packard Co. and others are building up a presence in India and elsewhere.

EDS' moves have an added degree of difficulty, having begun during the company's turnaround process.

In 2002, the company was in a tough situation, having trouble landing contracts while inching precariously close to a liquidity crisis.

Chief executive Michael H. Jordan took over in 2003 and announced mass layoffs soon after.

Acquisitions, too

The grand march offshore involves plenty of hiring, but acquisitions will also add to the total.

This year, EDS bought a majority stake in Indian firm Mphasis BFL Ltd., which has about 12,000 employees.

EDS is merging Mphasis with its own Indian operations and expects to have about 20,000 Indian employees by the end of the year. (EDS does not yet include Mphasis employees in its total head count.)

In China, EDS expects to have 1,000 employees by the end of the year, up from about 100 today.

The Chinese head count could grow to about 2,000 by the end of 2007.

The company is also planning major service centers in Latin America and Eastern Europe, which both offer low-cost labor and a variety of languages to serve clients with international operations.

EDS
Electronic Data Systems operates an office in Hungary. Eastern Europe offers low-cost workers who speak a variety of languages, allowing them to serve international clients.

EDS has had offices all over the world for decades.

It had a particularly rapid international expansion under former parent company General Motors Corp.

But the most recent moves are distinctly different.

In the past, after winning a contract, EDS would often take over technology operations in the new client's international locations.

Now the company is building large campuses in such strategic locations as India and China and offering those locations' services to clients.

"A decade ago, we used to treat this with our client as an option," Mr. Heidt said.

Nowadays, EDS includes its offshore services in most contract bids unless clients specify otherwise.

Clients simply expect contract bidders to use offshore labor and pass along the savings.

Cooling potato

"The marketplace has generally accepted the notion of offshore labor being competent," said Todd Furniss, chief operating officer of the Everest Group, a Dallas outsourcing advisory firm.

"It's not nearly the political hot potato it once was."

Some jobs can't go offshore, of course.

Although EDS sends more and more work overseas, it must be careful to create the right mix of resources in Western countries and developing nations.

By 2008, EDS expects to have roughly 30 percent to 35 percent of its head count in offshore locations, up from about 13 percent in 2005.

That number should be about right, considering EDS' main businesses, said Rod Bourgeois, an analyst with Sanford C. Bernstein.

About 15 percent of EDS' sales come from managing nongovernment clients' software applications – a service that can be performed offshore relatively easily, Mr. Bourgeois said.

Over time, EDS will probably add even more employees offshore as it wins more contracts for other tasks, such as business process outsourcing, he said.

Not all offshore

But EDS will still need most of its employees closer to its clients' sites, Mr. Bourgeois said.

Roughly 60 percent of the company's sales come from running technology infrastructure for clients, a job that can't easily go offshore.

"For that reason, EDS' offshore head count is not going to go sky-high," Mr. Bourgeois said.

Getting to an offshore head count of 45,000 is difficult enough as it is.

The biggest buildup will come in India, where EDS is building two major service centers in Pune and Chennai. In those cities, it will compete with other major technology firms for employees.

India has become the top destination for outsourcing firms because its university system consistently churns out hordes of young workers with technology expertise and English proficiency.

Wages have begun to rise as employers compete for the best workers, but labor in India is still far cheaper than it is in developed nations.

Mr. Heidt has a plan to recruit top talent quickly.

It involves a variety of strategies, including print and electronic campaigns, referral programs and relationships with Indian schools.

He's also working on ways to retain employees in a job market with heavy turnover.

Concentrating employees in large campuses could help persuade them to stay, since they can see a wide variety of potential career paths in one location.

"You can change jobs without leaving the building," Mr. Heidt said.

Hiring the employees is only part of the challenge, said Dean Davison, a vice president at outsourcing consultancy Nautilus Advisors.

The new workers must also be trained and versed in EDS' culture and practices.

Getting that many workers hired, trained and working on client engagements will require a Herculean effort, said Mr. Davison, who left EDS six months ago after serving as competitive and market intelligence director.

But if Mr. Heidt and EDS can pull it off, potential clients will notice.

"I look forward to them achieving it and making it part of their services offering," Mr. Furniss said.

"It really should help EDS' competitive position."

I worked for this company for 6 1/2 years and my job was outsourced in October of 2003. It would take to long to tell of all the things this company has done to it's employees. I started in 1997 and the account I was on had ~ 300 employees, now there are less than 50.

Dick Cheney use to be on the board of this company. The "good ol' boy" rules the company management, the only ones being cut are the workers actually bringing in the cash.