Magazine article American Banker

Diebold Pulls out of Pact with Deloitte Subsidiary

Magazine article American Banker

Diebold Pulls out of Pact with Deloitte Subsidiary

Article excerpt

The North Canton, Ohio, automated teller machine maker Diebold Inc. said it will bring its technology operations back in-house next month, ending its outsourcing agreement with a Deloitte Consulting LLP unit three years early.

For the past four years Diebold has been outsourcing support for its enterprise resource planning system to DC Outsourcing ITO LP. This system handles all aspects of order fulfillment, including organizing resources for Diebold's manufacturing operations.

Mike Jacobsen, a Diebold spokesman, said Wednesday that the outsourcing deal led to "efficiency" issues, though they were mostly invisible to Diebold's customers. Bringing the processes in-house will "rebuild the profit margins and strengthen the supply chain."

On June 1, Diebold will hire 80 Deloitte employees, 70 of whom worked for Diebold before the outsourcing agreement was signed. Two of the 80 people work overseas, and the rest work in North Canton.

Because Diebold is closing out its contract with DC Outsourcing early, it will have to pay a termination fee. To cover that fee, Diebold expects to take a charge of 7 cents a share this quarter. Its full-year guidance calls for earnings of $1.68 to $1.83 a share, excluding restructuring charges of 57 to 62 cents.

Diebold said the deal cancellation is a part of a three-year restructuring plan that its president and chief executive, Thomas W. Swidarski, said in February would eliminate $100 million of costs. …

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