Source:www.rockymountainnews.com
First Data hopes to save $150 million annually in an outsourcing plan that targets nearly 6,000 of its technology employees.
The company says it's adopting the plan "to more efficiently compete on a global scale, better utilize our global talent and footprint, and leverage the labor pool in lower-cost locations," according to a securities filing from the company Monday. First Data estimates it has 6,600 technology workers, 90 percent of whom are in-house employees.
First Data spokesman Colin Wheeler declined to specify a number of employees who could be affected by the outsourcing.
The company has 2,000 Denver-area employees, many of whom work at the corporate office.
The filing presents information given to potential investors in new debt from the Greenwood Village-based transaction processor. First Data is trying this week to sell $22.4 billion in loans and bonds that will allow buyout firm Kohlberg Kravis Roberts to buy First Data for $29.8 billion.
The credit markets have significantly deteriorated since the deal was announced in April. KKR, as the buyout firm is known, is trying hard to get the debt sold. Part of the effort is convincing Wall Street that First Data will have the cash flow to make the payments.
The global outsourcing plan is the largest of several cost-cutting initiatives. First Data also is consolidating 12 data centers and seven "command centers" in the U.S. into three and two over the next several years. The company announced that plan soon after Ric Duques became CEO in the fall of 2005.
First Data said it will incur charges of about $125 million to $150 million to implement the initiatives.
As First Data prepped to sell its debt, it modified several terms to make the loans more palatable for investors. Still, the sale continues to be rough going.
"We just think that that's too leveraged of a deal for the current credit market," Wesley Sparks, portfolio manager and head of U.S. credit strategies at Schroder Investment Management in New York, told Bloomberg News.
