Levi’s to erase 500 jobs with outsourcing initiative

Denim giant Levi Strauss & Co is set to cut 500 jobs as the result of
a five-year outsourcing agreement the company has entered with
business solutions provider Wipro Limited, which is part of the second
stage of its global productivity initiative.

Once fully implemented, the initiative is predicted to generate
between 175 million dollars and 200 million dollars net annualized
cost savings. The new round of cuts, which is part of the plan first
begun in March is predicted to eliminate roughly 500 jobs.

As part of the deal with Wipro, Levi’s is set to outsource certain
business services within information technology, finance, human
resources, customer service and consumer relations to the company.

“We’re on a mission to transform our company to deliver sustained,
profitable growth. Through our efforts this year, we’ve made great
strides toward bringing our cost structure more in line with our
revenue base,” said Harmit Singh, chief financial officer of Levi
Strauss & Co.

“We are making solid progress, and I expect that the actions announced
today will help simplify how we operate, improve our productivity
levels, increase our agility and further reduce costs.”

The denim retailer will continue to cut down on the layers of
management within the company, increase spans of control and remove
duplicate roles as part of the productivity initiative and continued
transformation of its cost base.

Levi’s added that the final plans will “vary by country, and final
estimates for headcount, timing and charges in certain areas of the
company’s international business are subject to completion of
applicable local works council and other consultative processes.”

The company expects to incur between 45 million dollars and 55 million
dollars in costs, mainly due to severance benefits and retention
bonuses and consulting fees, of which the majority are expected to be
reflected in the fourth quarter of 2014.

Overall, Levi Strauss & Co predicts it will pay Wipro a minimum of 143
million dollars throughout the initial five-year term of the
agreement.

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