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The Herald: Shell employees fear more job cuts

December 31 2007

Fears are growing that oil giant Shell is preparing to shed around 3200 jobs in the latest cost-cutting move by the industry.

The company has told staff that it is planning to outsource “a substantial part” of its IT infrastructure services division, believed to comprise a total of 3600 staff.

Detailed consultations with workers affected start early in the New Year, with a start date for the new arrangements planned for July 1.

The move by the Anglo-Dutch producer follows hundreds of UK jobs cuts and the off-loading of thousands of other worldwide posts at rival oil firm BP.

Details about Shell’s move were outlined in an apparent leaked email from the company’s vice-president of IT infrastructure, Goh Swee-Chen.

In the message, dated December 19, she said three partners had been selected for the outsourcing deal – EDS, AT&T and T-systems – with contracts expected to be signed in March next year.

Swee Chen told staff: “I acknowledge that there will still be uncertainty as we are working through the finalisation of contracts, open resourcing and transition preparations.

“I encourage you to keep an open mind and take the time to learn more about the suppliers as employers and as business partners.”

A series of “Facing Change” meetings for staff have been set up from January 8 to outline the proposals, she added.

The message was sent to the campaigning website royaldutchshell.com, which is occasionally used by Shell staff to air their grievances.

A spokeswoman for Shell refused to comment on the email, but confirmed the outsourcing plans.

One employee who contacted the royaldutchshell.com website said the plan was to retain 400 IT staff at Shell, with the remaining 3200 outsourced. The worker said: “To be fair to Shell we have been aware of the outsourcing for at least six to eight months.

“It was not until very recently, however, that we found out which jobs were mapped to be outsourced, and who is taking over the contracts.

“It is speculated that it still will take at least another six months for the full transition to become complete, given the scale of the project.”

One outsourcing expert told the Sunday Telegraph that if 3200 staff were involved in the outsourcing, it would be one of the biggest deals he had heard of.

Shell, which employs about 108,000 worldwide including 3000 at its main UK office in London, has said previously that it wants to cut costs.

The group unveiled third-quarter earnings of $6.39bn (£3.2bn) in October, down 8%. And in an interview with Dutch newspaper de Volkskrant earlier this month, Shell’s chief executive, Jeroen Van der Veer, said that production costs had risen 65% in two years.

In October, BP announced plans to cut around 350 jobs at its North Sea headquarters in Aberdeen, and last month also said it was offloading all of its wholly-owned American forecourts and supermarkets in a move that will affect nearly 10,000 US staff.

Shell has said it is also looking at reducing staff numbers in its finance division, as well as combining other departments and operational centres around the world. It is part of a review that has been taking place since 2005 which aims to save the oil producer around $500m a year.

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