Friday June 14, 5:01 am Eastern Time Reuters Business Report Report: P&G to Outsource Work
NEW YORK (Reuters) - Consumer products maker Procter & Gamble (NYSE:PG - News) plans to farm out about 80 percent of its back-office work in a multi-billion dollars contract that could be a landmark piece of business for the outsourcing industry, the Wall Street Journal reported on Friday. ADVERTISEMENT
Citing people close to the company, the Journal said Electronic Data Systems Corp. (NYSE:EDS - News) and Affiliated Computer Services Inc. (NYSE:ACS - News) are among the finalists seeking to win a contract valued at about $1 billion per year.
The report said such contracts typically last seven to 10 years. Officials for the three companies were not immediately available for comment.
The Journal said that on Thursday P&G officials told staff during a conference call that about 5,700 employees would transfer to the outsourcing company.
The most likely scenario, the report added, was that P&G would sell its back-office operations to either EDS or ACS and then award the buyer a large outsourcing deal, almost like a sale and leaseback.
This week P&G raised its fourth-quarter earnings forecast due to strong sales volume in beauty and fabric care and other businesses, signaling an improved performance of the maker of Crest toothpaste and Tide detergent.
P&G is undergoing a massive restructuring after years of seeing profits pressured by high costs, currency weakness in overseas markets and a lack of focus on its major brands.