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Michael H. Jordan

chairman & ceo, electric data systems

Dominic D’
Alessandro, President & CEO, Manulife Financial Corporation
Michael H. Jordan, Chairman & CEO, Electronic Data Systems, addresses the Boston College Chief Executives’ Club of Boston in the Wharf Room at the Boston Harbor Hotel.

EDS to Double Jobs Outsourced to Low-Wage Regions in 2 Years

Electronic Data Systems Corp., the computer- and data-services giant, plans to double the number of workers it employs in low-cost countries world-wide within two years.

Chief Executive Michael Jordan said such countries have an increasing number of low-wage workers with the technical skills EDS needs, while the pool of people in the U.S. with those abilities is shrinking. "Any commercial enterprise has to take advantage of it," if the company is to remain competitive internationally, he said about outsourcing.

The Dallas-based company now has about 15,000 workers at "cost-advantaged locations" outside the U.S., Mr. Jordan said at a Boston College Chief Executives' Club luncheon.

Ronald Sargent (Chairman & CEO, Staples, Inc.), Robert Reynolds (Vice Chairman & COO, Fidelity Investments), Patrick Pucell (President, Herald Media, Inc.), David Chamberlain (Chairman & CEO, Stride Rite, Inc.), Edmund Kelly (Chairman, President, & CEO, Liberty Mutual Group), David Barrett (CEO, Lahey Clinic), Anne Finucane (President, Bank of America, Northeast), Michael Wedge (President & CEO, B.J.'s Wholesale Club), Cathy Minehan (President & CEO, Federal Reserve Bank of Boston), and Charles Baker (President & CEO, Harvard Pilgrim Health Care) listen to Mr. Jordan's remarks.

"We found there is no way to reverse the trend," Mr. Jordan said, as the number of people with engineering and information-technology degrees coming out of U.S. colleges isn't keeping up with demand, while India, for example, produces five times as many engineering graduates as the U.S. each year. "And we have to realize that this is a much more competitive world than it was 10 years ago," Mr. Jordan said.

EDS has about 117,000 employees world-wide.

The number of EDS workers in the U.S. and Europe will decrease in part because of jobs sent to Asia, Mr. Jordan said. He said employees in India work in customer-service call centers and in software development and testing, while China is a low-cost factory floor. Egypt, Brazil, Argentina and areas of Eastern Europe also provide EDS with low-cost workers.

Mr. Jordan holds a press conference after the luncheon

Mr. Jordan said EDS is "probably a little more than half way" through a multiyear restructuring, undertaken as high cost resulted from the company's historically low level of automation in management and high autonomy among those overseeing customer relations. The restructuring is intended to standardize equipment and solutions through automation, in order to improve service quality for customers while reducing expenses.

The approach now is to look at EDS as if it were a manufacturer, instead of a services provider, and then to consider where costs can be cut, Mr. Jordan said.

Article by Frank Byrt
The Wall Street Journal
Thursday, December 1, 2005