Jordan has previously said that EDS needs to reduce operating costs by 20%--or $3 billion--over the next two years to remain competitive in its industry. The company has already cut about 5,000 positions in the past year from a workforce of 125,000.
Jordan has said the cuts are necessary for the company to be price competitive with IBM Global Services and low-cost competitors from India. EDS is increasing its presence in emerging markets such as South America and Asia as it reduces headcount in the United States and Europe.
Analysts note, however, that it may take several years for EDS to realize any benefits from its efforts to cut its workforce. Many of its European employees, for instance, are protected by European labor laws that require employers to provide laid-off workers with three years of severance pay. Still, investors appeared to welcome the news. EDS shares were up 1.38% to $19.78 in early-afternoon trading on the New York Stock Exchange.
