Transfield to outsource IT, shared services

Transfield to outsource IT, shared services

Summary: In a cost-cutting measure aimed at offsetting deteriorating market conditions, NBN contractor Transfield has brought forward plans to outsource IT and shared services.

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TOPICS: Australia, SAP
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NBN contractor Transfield Services today flagged the company would bring forward plans to outsource shared services and IT,  as part of a measure to offset a reduction in full-year net profit of up to AU$28 million down from previous guidance of between AU$85 million and AU$90 million for this financial year.

The company blamed a slow down in the mining and process industry for the writedown, but said activity in coal seam gas, upstream oil and gas, defence and broadband were all still strong.

To counter this, Transfield told the Australian Stock Exchange today that it would bring forward AU$26.1 million in cost savings and reduce headcount by 113 positions. The company said it would achieve this through a number of changes including reorganisation of operational support functions, and outsourcing of back office functions including shared services and IT. The company currently employs 27,000 workers across 12 countries.

In February the company announced that its CIO, Stephen Phillips, would also take on the responsibility for operations business processes. The company said this would include financial shared services, but the scope for this position would expand as the company's technology platform is rolled out as part of Project Quantum.

Project Quantum is an SAP enterprise resource planning platform that the company will invest AU$51.4 million in this financial year that aims to replace systems and processes across Transfield with a single global platform.

In a presentation accompanying today's announcement, Transfield indicated that the scope of the rollout had been completed in the US with three businesses now migrated to the new platform, with Australia and New Zealand now underway. The project was progressing to schedule and on budget, and is due to be completed in the second quarter of 2014.

The company has said that it expects a direct reduction in roles that were there to compensate for fragmented information flows and platforms, and the new system will reduce the need to redo some work, such as off cycle payroll payments.

In March, Transfield secured a contract to build the National Broadband Network in Sydney, in a deal worth up to AU$170 million.

Topics: Australia, SAP

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Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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