Something big in works at EDS: smaller paychecks

Parent company HP says aim is to bring EDS salaries into parity

Hewlett-Packard Co., the parent company of IT services firm EDS, has cut salaries for some EDS workers by more than 30%, media reports say.

The Dallas Morning News and the local NBC affiliate, near where EDS is headquartered in Plano, Texas, are reporting the news of pay cuts based on interviews with unidentified employees.

The cuts, which could be as high as 50% once previous wage cuts by HP are tallied, may affect longtime workers in particular.

HP isn't releasing any details of the size of the cuts or numbers of employees affected.

An HP representative issued a statement saying that the action is aimed at bringing EDS salaries in line with those at HP.

A project "was undertaken to ensure that employees in both EDS and HP, holding the same roles, receive comparable compensation based on market rates," HP said in the statement. "While pay will not be impacted for the majority of employees as a result of this process, some employees will receive pay reductions while others will benefit from salary increases. We understand that these changes personally impact our employees and we are working closely with them during this transition."

HP acquired EDS last fall for $13.9 billion. EDS employed 140,000 people at the time of the acquisition.

Many U.S. firms have cut wages over the last year, but there could be other factors influencing any decision to cut wages at EDS, in particular, competition from offshore vendors.

Prior to its acquisition, EDS had been shifting more of its workforce overseas. It's a step being taken by the major IT services firm as it attempts to compete with low-wage workforces in India and elsewhere.

In 2006, less than 15% of EDS's workforce was based offshore, but by March 2008, just a few months before the acquisition, the offshore workforce was about 30%, according to data from the Everest Group Inc.

HP announced a company-wide salary reduction in February. At that time, HP said the base pay of other members of its executive council would be cut by 15 percent, and that other executives would take 10 percent salary cuts. The base pay of salaried workers was reduced by 5 percent.

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