TXU outsourcer to cut 200 Jobs

Capgemini Energy is moving 50 IT jobs to India

Capgemini Energy LP, the Dallas-based services entity formed in July when it won a 10-year, $3.5 billion deal to manage back-office operations for energy giant TXU Corp. (see story), is planning to dismiss between 200 and 230 former TXU workers by mid-October in an effort to cut costs.

Before TXU turned to Capgemini Energy to provide IT, call center and business services, the Dallas-based energy company was spending more than $1 billion a year in sales, general and administrative costs to support those functions, said Capgemini Energy CEO Bob Pryor. Capgemini Energy, which has since slashed those costs to $500 million, submitted a plan to TXU on Sept. 1 designed to trim those costs another 30% while improving service levels over the next 16 months, Pryor said.

"There's a recognition that their costs were just too high," he said.

To drive those costs savings, Capgemini Energy plans to dismiss 135 of the 2,700 former TXU workers by mid-October. Another 65 jobs will be moved offshore, including 50 application development and maintenance positions being moved to a Capgemini facility in Bangalore, India, and 10 to 15 finance and accounting jobs being transferred to Krakow, Poland.

Hewitt Associates Inc., a Lincolnshire, Ill.-based human resources services firm that serves as the HR subcontractor in the TXU/Capgemini Energy deal, plans to cut 30 of the 150 HR employees that transitioned from TXU, said Pryor.

Under its agreement with TXU, Capgemini guaranteed that all 2,700 of the former TXU employees would remain employed for at least three months. That agreement expired Oct. 1, and Capgemini Energy is planning a second wave of downsizing in February. Pryor declined to say how many positions might be affected at that time, but he did say that some IT infrastructure jobs will eventually be transferred to Bangalore and Krakow.

Of the 2,700 former TXU employees who transferred to Capgemini Energy, roughly 800 are in IT-related jobs.

TXU is the first of several U.S. energy companies for which Capgemini Energy hopes to provide IT and business process support services, said Pryor. The company is now in negotiations with several energy companies and hopes to have at least one more customer by the spring of 2005. "We're waiting to see how adding other clients affects us" from a staffing standpoint, said Pryor.

Capgemini Energy provides IT, call center, billing, human resources, supply chain, accounts payable, finance and accounting services to TXU.

Copyright © 2004 IDG Communications, Inc.

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