31 October 2002 Services giant EDS is to cut its workforce by more than 5,000 after it unveiled profits in the third quarter down by half.
For the quarter to the end of September, EDS reported net income of $86 million (€87.2m), down 59% on profits of $212 million (€214.9m) reported in the same period a year earlier. However, this exceeded the company’s earlier forecast, which followed a profit warning when it suggested that its third quarter net income would fall by between $58 million (€58.8m) and $74 million (€75m). Revenues also fell, by 3% to $5.4 billion (€5.5bn).
The company blamed a lack of spending among its existing customers, as well as fewer new contract sales. It also cited “write downs associated with the US Airways and WorldCom bankruptcies, costs incurred as a result of under-performance of certain contracts – primarily in Europe – and asset impairment reserves”.
To counter falling revenues and profits, EDS said it would reduce its global workforce by between 3% and 4% over the next few quarters. Between 800 and 1,000 jobs will be axed before the end of 2002.
EDS also said it would shift a minimum of 1,500 application development and call centre positions to “low-cost solutions centres” in countries such as India in a bid to further cut costs.
