Shell
will hold its fourth quarter earnings call Thursday, where it's expected to
announce quarterly earnings of $5.82 billion. Added to the rest of the fiscal
year's profits, the year-end earnings after expenses should tally near $27
billion—roughly 5 percent greater than 2006.
Shell,
the world’s third-largest oil company and fourth largest corporation by
revenue, launched plans earlier this month to outsource nearly IT 3,200
jobs—most in the United Kingdom and Europe—as part of a corporate-wide
cost-cutting program.
The company expects to save nearly $500 million a year through these
organization changes.
"Royal
Dutch Shell is in a good position to drive new, standardized ways of working
through the company, to reduce complexity and speed up decision making," said
Shell
CEO Jeroen van der Veer in his strategic statement released earlier this
month. "Operational synergies and cost savings should add some
$0.5 billion to earnings each year, across the medium term."
Despite
oil prices selling at record highs on world markets, a Shell and oil companies
have come under increasing profit pressures as the cost of exploration and
refining crude increases and erodes retail profits. In published reports, van
der Veer has said that Shell’s production costs have increased more than 65
percent since 2005.
Shell
reportedly began notifying its 3,600 IT workforce of its outsourcing plans
earlier this month. The Anglo-Dutch company is mum on details, but stated in
previous interviews that roughly 40 percent of its current IT staff is
compromised of contractors. That means upwards of 1,800 full-time Shell
employees could be affected by the outsourcing plan.
AT&T,
EDS and Deutsche Telekom are reported
as the leading contenders for the massive outsource contract. The company
expects to implement the outsourcing plan by June.
One
obstacle standing in the way of Shell's IT plans is union opposition.
Amicus, a large U.K.-based manufacturing union, is challenging the plan because
of previous changes in employee compensation plans.
Under
revisions enacted last summer, Shell employees who lose their jobs because
their positions were rendered redundant by other means would receive a package
worth 50,000 British pounds (roughly $100,000). Previous to the change, workers
were entitled to 200,000 pounds ($400,000).
There is
no word on what, if any, actions the union may take to stall Shell's
outsourcing plan.
IT Management 
