Ingram Micro Inc. is laying off 550 workers – including an estimated 140 in Canada – as part of an outsourcing and optimization plan to consolidate business operations in North America.
The world’s largest IT distributor is outsourcing jobs to India and the Phillipines in finance, customer
service, vendor management, along with some U.S. positions in technical support and inside sales. The company said it is in final negotiations with two leading global outsourcing providers in those countries and expects a decision to be reached by the end of April.
Management and field sales positions will not be hit by layoffs, the company said.
“”We’re looking at the business and the competitive landscape of the market,”” said Ingram Micro Canada general manager Murray Wright. “”We’re focusing at Ingram Micro on optimizing our return to our shareholders, and our customer service levels. I don’t think it’s any more complicated than that. It’s an optimization plan today,”” he added.
Wright said about half the layoffs will take place at the company’s headquarters in Santa Ana, Calif. The remainder will be split evenly between its offices in Mississauga, Ont. and Williamsville, N.Y. Wright also said the “”vast majority”” of the laid-off workers won’t go immediately but will help Ingram outsource its operations. Some will stay anywhere from three to 12 months.
The company expects to save approximately $10 million this year by overseas outsourcing to offshore markets and consolidating operations at home. By the first quarter of 2006, Ingram hopes to reach annualized savings of $25 million. Ingram Micro estimates the cost of the outsourcing and consolidation at $26 million. Almost all of the costs will be charged to operating expenses and will include reorganization, relocation and consulting expenses, according to the company.
Wright said the changes won’t alter Ingram Micro Canada’s relationship with its reseller and vendor partners.
“”I think a lot of time there’s a negative connotation (with outsourcing),”” he said. “”We’ve done an extensive amount of research. I expect service levels to be un-impacted. From our sales organization in Canada, we’ve got all the same field coverage. The inside coverage is the same. So the customer experience, I would expect it to be a non-event.””
In fact he believes the strategy will allow Ingram to improve customer services and free up capital for new investments. He cited video games, point of sale (POS), automatic identification data capture (AIDC), and digital home products as markets the company is expanding into. Last year Ingram Micro acquired Nimax for its POS/AIDC sale offerings.
“”I think we’ll have a very flexible and nimble organization,”” Wright said. “”We’ll have a more flexible cost structure. We’ll be more nimble and we’ll be able to make investments in new markets and adjacent markets.””
The outsourcing and consolidation announcement came a week after Ingram Micro CEO Kent Foster announced he is retiring effective June 1. Foster will be replaced by current president Greg Spierkel.