XEROX's OUTSOURCING DEAL WITH H.C.L. RAISES ISSUES

[Anonymous]

XEROX’s OUTSOURCING DEAL WITH H.C.L. RAISES ISSUES

A lot of Xerox Corp. equipment is made for the company by Singapore electronics manufacturer Flextronics International.Fuji Xerox, which is Xerox’s partnership with FujiFilm Holdings Corp., also produces equipment as well as technology.And now HCL Technologies Ltd. of India will handle a sizable piece of research-and-development work previously done by Xerox engineers.The five-year deal inked a week ago with HCL has Xerox expecting improved R&D and leaves hundreds of affected workers wondering what happens next to their jobs. Under the arrangement, HCL takes over some of Xerox’s technology engineering duties, and 600 Xerox engineers in North America and western Europe — including 250 in the Rochester area — are to become employees of HCL.For Xerox, the deal is all about expanding its engineering capabilities, said Willem Appelo, president of the company’s Global Business and Services Group, pointing to HCL’s 15,000 engineers.

While Xerox said cost savings weren’t a prime motivator, "offshoring and outsourcing is becoming the watchword of the day" as companies cut costs to compete, said Rudy Hirschheim, a professor at Louisiana State University’s Ourso College of Business.HCL has offices in 26 nations, posted sales of $2.7 billion in its most recent fiscal year, and employs about 73,000 people globally doing information technology work, business process outsourcing, and software and systems engineering.

Six thousand of those employees are in the United States, and 2,300 of those 6,000 are Americans, said HCL spokeswoman Avena Suri.HCL said it’s typical for the compensation of employees it absorbs from client companies such as Xerox to remain close to what it had been. Still, experts say the fates of such workers are iffy.Outsourcing companies, whether overseas like HCL or U.S.-based like Electronic Data Systems, make their money by having cheaper labor costs and greater efficiency than the companies that hire them, said Mary Lacity, University of Missouri professor of information systems.

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June 29, 2011 at 9:50 AM