Shell downsizes IT

Shell is to reduce its worldwide IT headcount by up to 2,700 over two years. Some cuts result from globalization and software rationalization, but others reflect offshoring to India and Malaysia.

Shell is undertaking a major reduction in its information technology (IT) head count. Between 1,900 and 2,700 IT positions are to go worldwide by year end 2006.


Shell spokesperson Johan Zaayman told Oil IT Journal, ‘From the outset, allow me to explain the rationale for this decision. Firstly, as Shell businesses standardize and globalize their business processes, it allows us the opportunity to rationalize the number of applications. This in turn gives the opportunity for a standardized infrastructure.’


‘In simple terms it means that we will need fewer people to set up and operate our IT environment. Secondly, the IT market has matured over recent years and Malaysia and India now offer excellent alternatives in comparison to high cost locations such as the US, UK and The Netherlands,’ Zaayman continued.

All units

‘All Shell business units will be impacted, thus the affected IT positions will be across the board. We expect to reduce 600 to 800 IT positions in the US, 400 to 550 IT positions in the UK, and 450 to 650 IT positions in The Netherlands by the end of 2006. We further expect from 450 to 700 reductions in all other countries we operate in. These positions include Shell staff and contractors within IT.’


‘The reduction in the IT community will come about by a combination of reductions in contractor positions, natural attrition, re-skilling and placement of individuals within other parts of Shell and severances. Thus, the reduction in positions does not equate job losses of Shell IT staff.’


‘We are rationalizing our applications portfolio with a view to standardizing and cutting out applications. We are focusing on fewer, more strategic IT projects. We are standardizing and rationalizing our IT infrastructure and leveraging our procurement better. Whilst this will bring impacts across all areas of IT, we expect the biggest immediate impact to be on applications development and support and in infrastructure operations.’


A report in the Houston Chronicle, which broke the original story, indicated that Shell has awarded outsourcing contracts worth over $1 billion to IBM and Wipro for India-based IT services. Shell would not comment on the commercial aspects of these deals.

Click here to comment on this article

Click here to view this article in context on a desktop

© Oil IT Journal - all rights reserved.