Denim giant Levi Strauss & Co is set to cut 500 jobs as the result of a five-year outsourcing agreement the company has entered with business solutions provider Wipro Limited, which is part of the second stage of its global productivity initiative.
Once fully implemented, the initiative is predicted to generate between 175 million dollars and 200 million dollars net annualized cost savings. The new round of cuts, which is part of the plan first begun in March is predicted to eliminate roughly 500 jobs.
As part of the deal with Wipro, Levi's is set to outsource certain business services within information technology, finance, human resources, customer service and consumer relations to the company.
“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, chief financial officer of Levi Strauss & 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.”
The denim retailer will continue to cut down on the layers of management within the company, increase spans of control and remove duplicate roles as part of the productivity initiative and continued transformation of its cost base.
Levi's added that the 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.”
The company expects to incur between 45 million dollars and 55 million dollars in costs, mainly due to severance benefits and retention bonuses and consulting fees, of which the majority are expected to be reflected in the fourth quarter of 2014.
Overall, Levi Strauss & Co predicts it will pay Wipro a minimum of 143 million dollars throughout the initial five-year term of the agreement.