EDS offer early retirement to US staff to cut costs

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EDS offer early retirement to US staff to cut costs

Electronic Data Systems (EDS) will offer voluntary early retirement options to about 9,200, or 17%, of its US employees, as part of its ongoing efforts to reduce costs.

EDS expects about half of the eligible employees to accept the early retirement offer, which would cut its US workforce of about 53,000 by about 9%.

EDS expects that less than half of the vacated positions will have to be filled again, which will generate net savings of about $150m (£82m) in 2005 and net annual savings of about $250m starting in 2006.

EDS chairman and chief executive officer Michael Jordan said last month the company plans to eliminate between 15,000 and 20,000 jobs over the next two years as part of an effort to cut $3bn in costs. The EDS spokeswoman said the early retirement offer is part of this plan.

EDS, the world's second largest IT services company after IBM, has been struggling for over two years with a variety of problems, including disappointing sales, problematic client contracts and an ongoing investigation from the US Securities and Exchange Commission launched in 2002. Jordan was hired in March 2003 to address these problems.

EDS expects to take a pretax charge of about $150m in this year's fourth quarter as a result of the early retirement programme.

Retirement dates will be staggered through four quarterly stages ending on 30 September 2005. EDS extended the offer to most US employees who by year-end 2004 will be at least 50 years old and fully vested in the company's retirement plan.

EDS has not decided whether to offer early retirement to employees outside of the US yet, the spokeswoman said. EDS now has a total of about 119,000 employees worldwide.

Juan Carlos Perez writes for IDG News Service


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