The Espoo, Finland-based company employs 2,300 of its total workforce of 13,634 in the operation, which provides infrastructure and applications outsourcing and support services.
Last month, Tietoenator announced plans to centralize the division’s mainframe operation and helpdesk support functions over the next two years. It is also sub-contracting 71 of its on-site support team to staffing agency Manpower.
With India’s community of low-cost offshore services suppliers moving into areas such as helpdesk support, there has been a growing trend for large IT services providers to sub-contract low-level support functions to specialist vendors in order to protect profit margins.
Revenue from the Processing and Network unit fell 9% in the first quarter to 93m euros ($120m), but Tietoenator hopes the restructuring, which will cost 10m euros ($13m) this year, will help it to achieve annual cost savings of 10m euros ($13m) from 2006.
Tietoenator reported an overall 18% decline in net profit for the first quarter of the year when it said that although customer demand for new IT services projects was increasing, clients were cautious about signing big deals, and pricing pressure was strong.
