Walgreen Outsources Accounting Services To Genpact (India)
DOW JONES NEWSWIRES
Walgreen Co. (WAG) inked a 10-year agreement for Genpact Ltd. (G) to take over accounting services as part of the drugstore giant's effort to spur growth and improve efficiency.
Financial terms weren't disclosed.
Faced with tight consumer spending, Walgreen has been working to overhaul its INTERNAL OPERATIONS and stores with the aim of cutting costs. The company said a year ago it intended to reduce capital spending by $1 billion through 2011 and was targeting an additional $1 billion in annual cost cuts.
Under the agreement, Genpact will assume several accounting processes currently managed by Walgreen as the retailer implements a new structure for its accounting division. The agreement will affect accounting staff at its offices in Deerfield, Ill., and surrounding areas including Danville, Ill., as well as nine smaller accounting locations across the U.S.
Genpact agreed to buy the Danville facility and maintain, and possibly increase, staffing over the life of the pact. About 500 Walgreen accounting employees will become Genpact employees over the next four months, with the remainder staying with Walgreen.
With the acquisition, Danville will become the largest of Genpact's three U.S. delivery centers, allowing the company to provide greater onshore access to its clients.
"This agreement strengthens our ability to deliver end-to-end solutions for the retail and health-care industries," said Genpact President and Chief Executive Pramod Bhasin.
Another 300 jobs at various Walgreen sites could be affected over the next six to 18 months. A Walgreen spokeswoman said any potential impact on those employees hasn't yet been determined.
The representative also declined to reveal how much Walgreen expects to save from the agreement.
Walgreen shares were recently down 1% at $36.65, while Genpact shares were up 1.2% at $15.25.