The company on Tuesday said it will shut down call centers in Harrisburg, Pa.; Roseville, Calif.; San Jose, Calif.; and Pasadena, Calif., resulting in 1,300 job cuts. EarthLink will also reduce call center operations in Atlanta by the end of the first quarter this year.
The company will outsource most of its call center jobs to companies based in the United States, India and the Philippines.
"The number of employees being outsourced offshore will increase," EarthLink spokesman Dan Greenfield said. "We still will have some internal contact center operations, but the bulk will be outsourced."
EarthLink joins a growing number of companies that are looking abroad for cheaper outsourced labor. America Online also runs outsourced call centers in India and the Philippines to complement its domestic centers in a number of states.
Just recently, AOL confirmed that it will hire software engineers in Bangalore, India, to work on projects with its U.S. staff. Web portal Yahoo in July said it planned to hire 100 engineers in Bangalore by the end of 2004.
More than 80 percent of software companies are shipping skilled work overseas to save money, according to research firm Sand Hill Group. This trend has sparked concerns that most technology jobs will be located outside the United States within the next decade.
EarthLink expects to take a $36 million restructuring charge for the first quarter. This amount includes $13 million that will stem from employee-related costs, $14 million from lease termination and $9 million from noncash asset write-offs.
These costs will affect the company's 2004 net income estimate. The company previously said it expected to report a net income between $31 million and $63 million. EarthLink has not yet released new estimates that take the charges into account.
EarthLink said it will use the cost savings to invest in expanding its subscriber base and to improve its earnings. Last quarter, EarthLink reported 71,000 new subscribers, largely in its broadband service. However, its dial-up subscribers declined by 3.4 percent from the previous year.
