GTSI jettisons 80 workers

Government IT reseller GTSI Corp. is laying off about 80 employees as it attempts to recover from problems with an internal system and move forward with its strategic plan to increase its solutions business, Dendy Young, chairman and CEO said today.

The Chantilly, Va., company had problems after it put in place a new PeopleSoft enterprise resource planning system in mid-April. GTSI had to change internal processes to accommodate the new system, which had bugs that delayed deliveries of IT hardware, software and services to the government sector, Young said.

The cuts, which will affect about 10 percent of the company's workforce, will leave GTSI with 760 employees. The company is trying to eliminate duplicative efforts and move out of activities that have failed to produce adequate profits. For example, GTSI had training operations in two different parts of the company, as well as two different parts of the company working on its Web site, according to Young.

The job cuts are the first step of a long-term strategy, he said. Next, GTSI will focus on continuing to improve its internal processes, including its quote-to-order process and invoicing. In the last stage, the company will focus on more sophisticated solutions, Young said.

This is the second time in the last five months that GTSI has reduced its workforce. In October, at the end of the government buying season, the company fired more than 90 employees, Young said. The company anticipates no further layoffs, he added.

GTSI previously said that problems implementing its ERP system were partially to blame for weaker financial results in 2005.

In July 2004, the company had announced a plan to double its revenue, increase margin and bump up productivity by 2007 by investing in its IT infrastructure, marketing, operations and sales. But the problems with the ERP systems and other internal distractions have largely derailed this effort.

The company will provide more details about its strategic plan, along with its fourth-quarter and full 2005 financial results March 7, said Paul Liberty, GTSI's director of investor relations.

GTSI reported revenue of slightly more than $1 billion in 2004. It is No. 19 on Washington Technology's 2005 Top 100 list of federal prime contractors, ranked according to their information technology revenue.

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