Transcom moving operations to the Philippines

The following is full text of a news release issued by Transcom on February 21, 2012.

Along with yesterday's termination notices, Sault Ste. Marie employees were given the option of two potential end dates - May 19 and June 29.

The Sault call centre will close its doors for good on June 29, 2012.

***************************
Transcom to close four sites in North America and expand in the Philippines. Net cost in Q1 2012: €1.6 million

LUXEMBOURG - During the past year, Transcom has experienced a shift in the demand from its installed client base towards an increased proportion of offshore delivery.

In addition, due to the strong performance of its Asian operations, Transcom has been successful in winning significant new business to be delivered from its centers in the Philippines.

This positive growth trend in the company’s Asian operations is expected to continue through 2012, driven by client requirements and market demand.

As a result, an onerous lease provision related to the Iloilo site in the Philippines will be written back, positively impacting Q1 2012 results by €3.7 million.

Future lease payments for the Iloilo site will thus be classified as expenses in the ordinary course of business.

This will reduce the negative cash flow impact associated with the restructuring and rightsizing plan, announced in June 2011, by approximately €1.2 million per year in fiscal years 2012, 2013 and 2014.

In addition, Transcom announced today that four of its current sites in North America will be closed by the end of the second quarter of 2012.

The sites in question have been underutilized for some time, and management does not anticipate that a satisfactory utilization can be achieved within a reasonable time.

The company has experienced a significant decrease in volumes delivered through its onshore centers in North America, while volumes delivered in Asia have increased.

The cost to close these sites amounts to €5.3 million.

The total cash impact is €4.5 million: €0.6 million in Q1 2012, €3.0 million in Q2 2012, €0.2 million in Q3 2012, €0.2 million in Q4 2012, and €0.5 million in subsequent quarters.

Once finalized, the closures will generate annualized cost savings amounting to approximately €1.7 million.

Savings to be realized in fiscal year 2012 are estimated at €1.4 million.

The net cost of the actions described above, impacting Q1 2012, is estimated at €1.6 million.

Furthermore, in response to client demands, Transcom is planning to increase the number of agent positions at its Bacolod and Manila sites in the Philippines.

“The optimization of our capacity utilization is key to value creation, and will always be a central priority for Transcom. The decision we announce today, to make further capacity adjustments in North America, should be viewed in this context. Achieving an adequate utilization of our resources will continue to be an important focus area this year as we evaluate our global delivery footprint,” commented Johan Eriksson, the president and CEO of Transcom.

***************************

Earlier SooToday.com coverage of this story

Transcom closing its Sault call centre