Roche to ax 350 IT jobs in U.S and Europe in shift toward offshoring

Roche, Basel

Roche ($RHHBY) is set to lay off 350 IT employees in the U.S., Switzerland and other European countries, Basler Zeitung reports. The move amounts to a reallocation of resources from expensive locations including San Francisco to Roche’s shared service centers in Warsaw, Kuala Lumpur and other cities.

Approximately 100 positions in San Francisco are expected to be affected, with a further 100 posts in Roche’s home country of Switzerland also facing the ax. The cutbacks will affect another 150 Roche IT employees based in other countries, mostly in Europe. Roche confirmed the restructuring to Swiss newspaper Basler Zeitung and, later, to Reuters.

Full details of the reorganization are still being worked out, but the basic strategy is in place. Roche is planning to lay off 350 employees at the aforementioned sites in the U.S. and Europe by the end of next year. At the same time, the Swiss Big Pharma is preparing to create approximately 300 IT posts at other locations. Roche is also evaluating its relationships with external service providers.

While Roche is yet to publicly disclose where it plans to create the 300 new positions, it already has multiple sites that are likely to pay lower wages than its operations in the U.S. and Switzerland. Roche’s network of shared service centers includes sites in Hungary, Poland and Malaysia. And the company is reportedly considering opening a center in South America.

By axing staff in the U.S. and Switzerland and hiring in eastern Europe or Asia, Roche should be able to save money at a time when its IT department is adapting to cope with a forecasted increase in demand for its services. Basler Zeitung cites the anticipated rise of precision medicine as a factor that contributed to the IT team deciding it needed to free up resources.

Roche is far from alone in looking outside of the U.S. and Europe for IT employees. AstraZeneca ($AZN) has set up technology delivery centers in China, India and Mexico, and has long considered adding a site in eastern Europe. Other companies, such as Novartis ($NVS), have looked to lower costs by outsourcing, a strategy that AstraZeneca also favored until recently.

Yet, while Roche is keen to make savings, it is still keeping IT teams in Western locations, Notably, the $300 million computer science building that is being built in Switzerland is still going ahead as planned.

- read Basler Zeitung’s article (in German)
- and Reuterspiece

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