Sears Canada has reportedly decided to outsource most of its IT and accounting functions in an attempt to cut costs and focus on its core retailing business. The retailer has struck a deal with US technology giant IBM and Indian outsourcer Wipro to have these functions carried out in low-cost countries such as the Philippines and India.
Most of the IT work will be done in the Philippines while the finance and payroll work will take place in India, reported the Financial Post. The plan, however, is leading the retailer to lay off about 250 employees in Canada.
Not all IT functions will be outsourced; application development and management will continue to be handled in Canada.
“For Sears to continue maintaining its systems, it’s going to take a lot of investment. We want to invest in our core retail business — which are things like improving the stores, store presentation, e-commerce,” said Vince Power, the retailer’s vice-president of corporate affairs and communications.
Sears said that outsourcing IT functions would increase its efficiency and allow it to focus on its core retailing business. Power told the Post that the plans would also make the company more competitive and help it to serve customers better.
Sears’ revenue has been shrinking for the past seven years as the competition has heated up in the Canadian retailing market following the entry of new retailers such as Target. In a statement issued on Tuesday, the retailer reported a 9.6% drop in its second-quarter earning from the same period last year.
According to the Post, Sears Canada employs about 29,000 people across the country. Sending jobs overseas has outraged workers in Canada, where unemployment is over 7%.
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