From January 2007, SBS will be merged with four other units: Program and System Engineering; Siemens Information Systems Ltd; Development Innovation and Projects; and Business Innovation Center. The group will be renamed Siemens IT Solutions and Services or SIS for short. Its 43,000 employees are expected to generate approximately 5bn euros ($6.3bn) in revenue.
The move comes after months of speculation that loss-making SBS would be sold, with reports of a number of suitors looking at the possibility of taking it off Siemens’ hands if a suitably long-term outsourcing contract was included. The loudest rumors pointed to Atos Origin as the most likely buyer, and one industry source told Computer Business Review in August that the French company was very close to completing a deal, but that talks broke down due to the fact that SBS’s headcount was still too high despite major severance programs.
The German government’s reaction to the closure of a former Siemens subsidiary will have reminded Siemens that politically, if not legally, it cannot easily dodge its responsibility to its employees.
A year ago, Taiwan-based BenQ took over Siemens’ loss-making mobile handset operation with a 350m euros ($439m) sweetener thrown in, but pulled the plug last month, threatening 3,000 jobs. Accusations have been made, as critics have pointed out that the money paid to BenQ was far less than what it would have cost Siemens to shut it down itself. Political pressure, which included phone calls from chancellor Angela Merkel to Kleinfeld, has so far resulted in Siemens’ management putting off their own proposed 30% pay rises, instead setting up a 30m euro ($38m) hardship fund for affected employees. It is hard to imagine the UK or US governments making similar interventions, and highlights the difficulties than German companies have in attempting to embrace offshore outsourcing.