Open Text brings down axe on global workforce

Enterprise content management (ECM) software vendor Open Text is preparing to axe 15% of its global workforce following the recent acquisition of rival Hummingbird. The company currently employs more than 3,500 staff, but will cut that number by around 500 as part of the integration process.

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By  Andrew Seymour Published  October 17, 2006

Enterprise content management (ECM) software vendor Open Text is preparing to axe 15% of its global workforce following the recent acquisition of rival Hummingbird. The company currently employs more than 3,500 staff, but will cut that number by around 500 as part of the integration process. Open Text has not yet revealed which geographic regions will be most impacted by the news, but admitted that job functions within areas of the business that fit outside its core strategic focus remain most at risk. In a further move to reduce duplication costs from the merger, Open Text also disclosed plans to scale back facilities by closing and consolidating offices. Details of cuts are still being thrashed out, but the Canada-based vendor said it expected to reveal more information in early 2007. John Shackleton, president and CEO at Open Text , commented: “The changes we’re making involve some tough decisions. Unfortunately, this is necessary to eliminate the redundancies that invariably come when turning two companies into one. As we go through this transition, customers will remain our top priority. Customers expect us to be there for them when they need us. We have a track record of delivering excellent service and we will continue to do so through a combined organisation composed of highly trained service and support professionals.” Open Text tied up the US$489m acquisition of Hummingbird earlier this month and wants to move quickly on its integration plan to ensure minimum disruption to its business, especially as it claims to be the only ECM vendor boasting strong global partnerships with Microsoft, Oracle and SAP, the three big guns of enterprise software. “Our plan to integrate the companies is based on our long-term vision for the future and the strategic plans we’ve staked out to lead the ECM market,” continued Shackleton. “With the changes we’re making, we will be organised to deliver on our strategy, and leverage our unique strengths, including our extensive vertical-market expertise, to deliver leading solutions to customers.” Open Text is maintaining its strategy of organising its product and solutions expertise into groups focused on key vertical segments, including legal, financial services, energy, pharmaceuticals, retail, manufacturing, and media and entertainment. This structure allows it to align its industry and ECM solutions expertise with specific customer needs in each segment, according to the company. It has also confirmed that RedDot Solutions — which it has gained from the acquisition — will be maintained as part of its web content management strategy while the Hummingbird Connectivity unit will continue to operate as a distinct brand. “In our experience with acquisitions, we typically see a reduction of the acquired company’s revenue run-rate going forward, usually in the 30% range," said Shackleton. "We believe this metric is consistent with our expectations of Hummingbird ECM revenue,” he added. Open Text launched a Middle East operation in Dubai way back in 2000, and earlier this month signed systems integrator ITQAN as its prime partner in the UAE. In its last published annual report, the Middle East, Australia, Japan and Malaysia, which it lumps together as a single territory, contributed US$25.6m in revenues. The company’s Middle East office could not be reached for comment about the workforce reductions.

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