IMS Health to axe 10% of workforce in 2008
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US-- IMS Health is to axe up to 10% of its workforce this year, as it looks to boost profitability – particularly in Europe – in the face of challenging healthcare market conditions.
As many as 760 jobs could go, with the restructure as a whole costing the firm an estimated $86-$90m, primarily in employee termination benefits.
Cost savings of up to $60m are expected. Consulting practice areas are to be streamlined, while select production operations within the firm's customer delivery and development organisation will be consolidated, with several geographies moving to common production platforms.
Jobs most at risk are likely to be in support functions across business lines, as well as in marketing, finance and administration. Client-facing roles should be largely untouched, as IMS says it wants to “strengthen” its account management and business development capabilities.
2007 proved to be a demanding year for the healthcare market – and IMS in turn – with drugs companies having to contend with competition from generic rivals, safety concerns and an increasingly tense regulatory environment.
Together, these factors served to complicate the decision-making process within client companies, leading to elongated sales cycles for IMS and slower-than-expected growth, particularly in the second and third quarters.
Announcing its Q3 results in October, finance chief Leslye Katz said the firm was “aggressively reassessing” its cost and expense structure.
“We are expanding our use of outsourcing in our production and development functions,” said Katz. “We have begun an offshoring initiative for some of [our] consulting and services delivery resources, which will reduce overall cost and increase the variable portion of our C&S cost structure. We have started a global procurement initiative, which will yield cost savings in 2008. And we have taken immediate action to limit hiring and to reduce discretionary expense.”
Further details of the restructure will come during a conference call to discuss the company's full-year results, scheduled for the end of the month.
Author: Brian Tarran
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