Cost Cutting Continues - but Production Capacity in India Doubles

These two stories were published today.

The Call center closing was reported by the Ottawa Citizen.

The production center story was reported by Business Standard (in India).

Go to the sites to read the whole story.

The most interesting lines of the Canadian story:

http://www.canada.com/ottawacitizen/news/story.html?id=d399d387-df1f-4400-8274-1c45879f8ed2&p=2

• Dell laid off 500 employees yesterday and will shut the call centre operation and eliminate another 600 positions this summer.
• The company previously announced plans to shut another Edmonton call centre employing 900.
• Dell said it took the action "as part of company-wide efforts to increase efficiency of its business, improve performance and provide better value for customers."
• There was not a politician in sight yesterday. The media were kept well away from the site, which will soon be empty.
• Last year, there were an estimated 300 call centres in Ottawa employing about 20,000 people. But like the automotive and other manufacturing centres of central Canada, many are in deep trouble as the dollars rises.
• The closing of the Dell call centre follows other recent, less-publicized closings by contract operators that are quickly shifting jobs to Asia.
• Company founder Michael Dell was conspicuously quiet yesterday.
• He is busy these days in Texas, trying to put his company back on track. Just 17 months ago, he told an adoring Ottawa audience "the remarkable growth of this customer contact centre is made possible by the depth of talent we found in the Ottawa workforce."
• It was left to Michael Jaillet, the Ottawa site leader and founder, to say in a statement "The decision to close Dell Ottawa was a very difficult one. We appreciate the contributions of our Ottawa team."
• Dell suffered some self-inflicted wounds: customer service declined and product quality problems rose.
  

Here is the positive side of the Dell story………for India.

http://www.business-standard.com/common/news_article.php?autono=320974&leftnm=8&subLeft=0&chkFlg=

Dell to double output on higher demand

Buoyed by strong demand from the corporate and small-and-medium business (SMB) sectors in India, Dell Inc, the world’s No. 2 computer maker, said on Tuesday that it would be doubling the production capacity of its lone plant in India from 4 lakh to about 1 million units per annum.

In a move to achieve this, the company announced the manufacture of a wide range of laptop lines at the Sriperumbudur plant near Chennai.

At the inauguration of the manufacturing facility at Sriperumbudur, Paul-Henri Ferrand, president - APAC South with Dell Asia Pacific, said the manufacturing capacity upswing would be driven by the making of their Latitude, Vostro, Inspiration and XPS lines of laptops in of the facility.

“This is consistent with our strategy for emerging markets and the over 100 per cent YoY growth we have witnessed in India for laptops in the first four months of the calendar year 2008,” Ferrand said.

Ferrand and other company officials declined to disclose employee numbers at the plant, which was announced in December last year, on an investment plan of $30 million over the next five years.

The increase in capacities out of India coincides with what the company regards as strong-growth upsides in the corporate PC (both laptops and desktops) and the x86 enterprise server market. In the latter, the company claims to have a market share of 20 per cent currently, from 10 per cent two years ago.
“In the first quarter of 2008, we were the leaders in the corporate PC segment. Besides, the SMB and consumer businesses in India have grown by over 100 per cent in the last one year. We want to expand coverage for our SMB business by 10 per cent over the next one year. We have also garnered a 10 per cent share of government projects over the past year of our focus on this vertical,” Rajan Anandan, vice-president and general manager, Dell India, said.

Ferrand said that SMBs hold promise as a strong market vertical for India. “We expect 1 million SMBs to get their first PCs this year. It is a nice segment to deploy our technologies going ahead,” he said.
Senior Dell officials also called for zero duty on all imported components, which presently constitute over 80 per cent of their procurement pie for the Sriperumbudur plant, without elaborating on whether they would pass on the savings accrued to the customer in the event of such duty exemption.

The company also unveiled the Dell 500 laptop customised for Indian conditions and focused on the SMB, education and government markets.

The Dell 500 laptop computer will come in different configurations starting at Rs 24,500.
The company, clearly abandoning its famous direct-to-customer approach to take on archrival Hewlett-Packard, has a slew of retail forays lined up in India this year following the signing of a corresponding agreement with the Tata Group’s Croma stores chain in March.

More announcements in this direction are likely soon, Anandan said, adding that the laptops manufactured in India would be sold directly as well as through retail partners. Dell India is looking at building a substantial solutions business for corporates and SMB customers.

Dell Inc, with a capital placed at $61-billion, employs over 12,000 people and delivers services and support in over 600 locations in the country. Revenues at the company’s Indian operations rose 60 per cent YoY to touch $700 million in 2007.