TietoEnator outlines EUR100m cost cutting plan
03 January 2008 | 6205 views | 0
Nordic IT services vendor TietoEnator is embarking on a restructuring and cost cutting programme designed to generate annual savings of more than EUR100 million by the end of 2009.
The vendor says it will discontinue or divest under-performing projects and improve the utilisation of staff and facilities by reducing administrative costs and accelerating its offshoring programme. The number of jobs affected by the plan has not been disclosed.
The performance improvement programme is designed to boost profits and end an 18-month run of volatile earnings at TietoEnator, which has mainly been been caused by project over-runs in the company's banking and insurance and healthcare and welfare units.
The programme will have a cash flow impact of approximately EUR100 million, of which EUR40 million will be booked in its Q4 2007 accounts. The vendor will also book impairments and provisions of some EUR60 million in the fourth quarter.
Hannu Syrjälä, who takes on the role of president and CEO at TietoEnator in mid-February, says the plan "is the right direction for the company to significantly increase customer satisfaction and add shareholder value".
"Going forward, these actions will be combined with significant investments in growth, people and quality," says Syrjälä.