Reply #1: Diebold Cancels Outsourcing Contract

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Diebold Cancels Outsourcing Contract, Brings Home IT, ERP

In a case of life imitating survey results, Diebold's decision will cost the company about $7 million.

By W. David Gardner
TechWeb.com

May 17, 2006 12:00 PM

Last spring, Deloitte Consulting released a study noting that 70 percent of large companies had negative experiences with outsourcing and that 25 percent brought outsourcing projects back in-house.

This spring, Deloitte Consulting learned that one of its outsourcing customers -- Diebold Inc. -- will bring its Deloitte outsourcing contract back in-house.

In an announcement Wednesday, Diebold said it will take over the implementation and support responsibilities for its Oracle global enterprise resource planning (ERP) system and some additional IT-related functions on June 1. Diebold said the shift will result in a charge of about 7 cents a share, which calculates out to about $7 million. The original contract was scheduled to last for seven years.

Diebold spokesman Mike Jacobsen said little disruption is expected in the move because the 80 IT employees involved already work at Diebold headquarters in Canton, Ohio. Moreover, most of them worked directly for Diebold until four years ago when Deloitte's affiliate, CD Outsourcing ITO L.P., began the contract.

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