EDB to axe jobs in NOK400m cost cutting programme

EDB to axe jobs in NOK400m cost cutting programme

After reporting disappointing first quarter financial results, Nordic IT services group EDB Business Partner has outlined plans to axe up to 150 jobs as part of a NOK400 million cost cutting programme.

The group posted operating profits before Ebita of NOK135 million for Q1, down on NOK173 million for the same period the previous year. Post-tax profit was NOK46 million, compared to NOK69 million for the same period in 2008.

Endre Rangnes, CEO, EDB, says: "We are not satisfied with the first quarter earnings, and this together with the worsening market situation has caused us to launch an improvement programme. One aspect of this programme is a reduction of NOK400 million in annual costs, of which personnel-related costs will account for NOK150 million."

The company, which employs around 6000 people, says it plans to cut between 100 and 150 jobs, mostly in Norway, but warns this could rise if the economic climate continues to deteriorate. The firm is also looking at cutting salaries.

In addition, the firm will continue to shift more work to cheaper sites in Ukraine and India.

Furthermore, around 350 of 900 hired contractors will also be let go, with those remaining set for a pay cut of between 10% and 15%.

The vendor warns that market conditions are expected to remain weak "for some time to come", although outsourcing is seeing increased activity.

This bodes well for EDB's prospects in the financial services sector, which accounts for around 40% of its total revenue and has held up relatively well in recent months.

In March four Norwegian banks - Sparebanken Sør, Sparebanken Sogn og Fjordane, Helgeland Sparebank and Gjensidige Bank - signed expanded five year services contract extensions worth around NOK800 million.

The vendor says Nordic banks are also turning to standardised technology as a cheaper alternative to systems built in house.

Earlier this month fellow Scandinavian IT services vendor Tieto outlined plans to axe around 620 positions on top of previously announced cuts of 350 jobs.

EDB shares were down 4.93%, or NOK0.7, to Nok13.50 in late morning trading.

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