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July 20, 2006
CVS to eliminate 140 jobs in Woonsocket
BOSTON -- CVS Corp. announced today that it will eliminate 140 positions at its Woonsocket offices in an overhaul of its human-resources department. The company says there will be layoffs, but some of the employees will be shifted to other positions.
Under a 10-year contract, IBM Corp. will take over payroll processing, benefit administration, employee intranet portals and other human-resources functions for CVS, which through acquisitions has seen its work force swell over the past two years by 55,000 people, to 170,000.
"This rapid growth has stretched our current systems supporting human resources transactions," said V. Michael Ferdinandi, CVS's senior vice president for human resources.
CVS said about 140 positions would be lost at headquarters in Woonsocket, R.I., as IBM takes over HR operations. CVS said it expects most of its affected employees to find other positions in the company. One reason is that with store growth and acquisitions, CVS has added 500 positions in Rhode Island in the past few years, spokeswoman Carolyn Castel said.
"Business transformation outsourcing" deals like this -- generally more lucrative than typical contracts to provide information technology -- are a huge part of IBM's efforts to recharge its services division, which is struggling to grow amid intensifying competition.
IBM said the CVS contract is one of its biggest such outsourcing contracts in recent years, and its largest in the retail industry.
Charles King, an analyst with Pund-IT research, said he believed the agreement was worth several hundred million dollars, adding that it was unusual for an outsourcing contract to stretch more than seven years.
"For two companies to agree to walk hand in hand for a decade is notable," he said.
IBM shares fell 59 cents to close at $75.48 on the New York Stock Exchange. CVS shares lost 2 cents to $32.05.
-- The Associated Press
Posted by Steve Peoples at 5:18 PM | Permalink
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