EDS to Lay Off 2,000 Employees

By Paula Musich  |  Posted 2002-07-02 Print this article Print

The news came on the heels of a precipitous drop in EDS stock price, as investors worried about the company's reciprocal contracts with WorldCom.

Electronic Data Systems Corp. today said that it would lay off about 2000 workers—mostly in North America—as a result of its own customers cutting costs and as a part of its two-year "rebalancing" effort, according to a company spokesman. The news came on the heels of a precipitous drop in EDSs stock price, as investors worried about EDSs reciprocal contracts with WorldCom, which last week reported significant irregularities in its accounting practices. The services giant also announced that it is dropping out of the competition for a multi-billion outsourcing contract that Proctor and Gamble is aiming to award later this year.
The job cuts, the most significant to date since EDS began its workload rebalancing initiative two years ago, will come from across the board in its various businesses. They represent a small percentage of the 140,000 people employed by the big outsourcer.
Although EDS has not made a habit of announcing such cuts, this is the largest job reduction it has undertaken, according to Jeff Baum, EDS spokesman in Plano, Texas. EDS won a $6.4 billion, 11-year IT services contract with WorldCom in the fall of 1999. At the same time, EDS signed an 11-year $6 billion contract with WorldCom for networking services. EDS officials minimized the potential impact that any WorldCom financial woes would have on its business or its customers.

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