Novell Inc. today announced a “restructuring” designed to eliminate costly American engineering jobs and re-create them in India, where labor costs are significantly less.
On Oct. 9 these layoffs were only a rumor, as we reported it here on the Log, but today it’s cold, hard fact.
Novell laid off 250 workers in the United States as part of an ongoing restructuring program to slash costs, company spokesman Bruce Lowry said Friday. Many of the jobs will be moved to Bangalore, India, where labor costs are lower than in the United States, he said. “While it’s not a one-to-one match of jobs lost in the U.S. to jobs gained in Bangalore, the most significant impact was on product development,” Lowry said. “The most important piece of that was, in fact, hiring engineers in India and reducing engineers in the U.S.” The company has previously told investors that it will take $35 million to $45 million in restructuring charges this year. Costs associated with these layoffs are included as part of that $35 million to $45 million, Lowry said.
The estimate earlier this month was that Novell would lay off 50-60% of its Workgroup division, although this brief from Reuters said nothing of which department these layoffs came from. This leads me to believe that the $35 to $45 million restructuring mentioned above is nowhere near complete.