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Heads Roll at Avon

IT outsourcing leads to job cuts.


By: Tom Branna

Heads Roll at Avon

Maybe, just maybe, the nerds won't inherent the earth—at least not at Avon Products, anyway. The beleaguered direct seller of cosmetics, personal care and other products will reduce its global headcount as part of the IT infrastructure outsourcing initiative. Yesterday, Avon announced that it had entered into an agreement with Hewlett Packard Enterprise Co to transform key elements of Avon's IT infrastructure.

As part of the agreement, Hewlett Packard Enterprise will provide a “high-quality service delivery using best practices and alignment to established global standards,” among others.

Hewlett Packard Enterprises will also identify cost efficiencies and provide tools and process to help Avon operate more consistently.

“As a leader in beauty and direct selling, Avon aims to stay ahead of the curve by laying a new foundation for their digital strategy,” said Mike Nefkens, EVP&GM of enterprise services, Hewlett Packard Enterprise. “The partnership with Hewlett Packard Enterprise will enable Avon's business transformation journey, which is critical for staying competitive in today's rapidly dynamic business environment.”

Avon expects to record total charges of $30 million before taxes, $20 million of which are expected to be recorded in the fourth quarter of 2015. However, Avon also said that it expects to begin realizing savings in 2018 and will begin to see an annualized pre-tax savings of $10 million to $15 million per year beginning in 2019.

It better. Shares of Avon have lost nearly 70% during the past year.

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