Levi Strauss Cuts 500 Jobs, Outsources Services to WiPro

11/17/2014
Levi Strauss & Co. will eliminate 500 jobs and outsource some global business services to Wipro Limited as part of a five-year strategic agreement. The company says the cost-cutting initiative, announced in March 2014, should
save $175 million to $200 million once fully implemented.

Starting in Q1 2015, Wipro will provide support for certain business services within IT, finance, human resources, customer service and consumer relations. LS&Co. also continues to reduce layers of management, increase spans of control, remove redundant roles and make other structural changes as part of the global productivity initiative and the company's continued  structural transformation of its cost base. Final plans will vary by country, and final estimates for  headcount, timing and charges in certain areas of the company's international business are subject to completion of applicable local works council and other consultative processes.

LS&Co. expects to incur total restructuring and related charges in the range of $45-$55 million, the majority of which will be recognized in the fourth quarter of 2014. The charges consist of cash expenditures principally related to severance benefits, retention bonuses and consulting fees.

"We're on a mission to transform our company to deliver sustained, profitable growth. Through our efforts this year, we've made great strides toward bringing our cost structure more in line with our revenue base," said Harmit Singh, CFO of LS&Co. "We are making solid progress, and I expect that the actions announced today will help simplify how we operate, improve our productivity levels, increase our agility and further reduce costs."

LS&Co. will pay Wipro for the services through a combination of fixed and variable charges, with the variable charges fluctuating based on the company's actual need for services. The company expects to pay Wipro a minimum of approximately $143 million over the initial five-year term of the agreement.

LS&Co. continues to expect additional savings in future periods to come from streamlining its planning and go-to-market strategies; implementing efficiencies across its retail, supply chain and distribution network; and continuing to pursue more disciplined procurement practices.
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