CDK ‘fit and focus' strategy continues with massive employee outsourcing plan

Retail technology giant CDK Global will unload an undisclosed number of its employees onto Genpact, a global business process outsourcer, as part of its continued "fit and focus" strategy to reorganize and boost efficiency. While CDK is acknowledging that some jobs will be eliminated, company officials also said they expect most affected employees will continue working for CDK through Genpact.

CDK CEO Brian MacDonald announced the move in a Feb. 22 email to employees that was obtained by Automotive News and confirmed by CDK. CDK's goal, MacDonald said in the email, is to free up resources to boost customer service, planning and strategic initiatives for the Hoffman Estates, Ill., dealership management system company.

The plan calls for outsourcing most of CDK's enterprise information technology unit, as well as parts of its technology, product, customer, finance and procurement divisions in the coming months to Genpact, according to MacDonald's email. It's unclear how many workers will be moved to Genpact. CDK, acquired last year by Brookfield Business Partners, employed about 6,000 people as of late January.

"Shifting workloads to a managed services provider makes strategic sense for our business and the alternative would have been deep cuts to our workforce," MacDonald said in his email, which was signed "Best, Brian."

Affected employees in North America and India will receive offers to work for Genpact in the coming weeks and will continue to support CDK as Genpact employees, MacDonald said in the note.

He added that there "will be some eliminations on some teams" but the company will help "people find other roles at CDK and will work closely with each affected person to support them financially and professionally as best we can."

MacDonald's employee announcement came about a month after he told Automotive News that CDK had no plans for another companywide layoff. Those comments followed a disclosure that CDK had made job cuts in late 2022 as part of streamlining efforts; the technology giant did not reveal the number of positions eliminated then.

In January, MacDonald also told Automotive News that CDK's head count is now "where we want it to be."

How many impacted?

CDK did not disclose to Automotive News how many employees will be affected by the Genpact decision, nor did it provide the specific time frame involved for the outsourcing process. The company did not respond by publication deadline to requests to interview MacDonald about the outsourcing to Genpact.

CDK spokesman Tony Macrito told Automotive News via email that "the transition will happen gradually," and customers "can continue to expect to receive the same industry-leading service they always have."

CDK has made a concerted effort in recent years to improve its customer service, simplify its billing and roll out initiatives such as a customer rewards program. It is unclear whether the outsourcing plan will affect those and other initiatives.

CDK counted 9,181 automotive DMS customer sites as of Dec. 31, 2021, and said roughly 12,000 automotive customers used its products in North America at that point. It was still a public company at the time, but Brookfield Business Partners took CDK private last July in a deal worth about $8.7 billion, designed to accelerate the company's strategy to create a seamless vehicle-purchasing experience for consumers. MacDonald had led CDK from January 2016 through November 2018 and returned in July as CEO after the Brookfield deal, with a goal of refocusing priorities and streamlining.

"When we took over the company, we told the employee base one of the key priorities would be getting fit and focused, and focused on what we want to do and be really good at that and deprioritize [other] things and get a little bit fitter," McDonald told Automotive News in January.

Employees' futures

Macrito said staff members who agree to transfer to Genpact will gain from "new opportunities for career advancement and skill development with a large, fast-growing, globally admired company."

Genpact describes itself as a "global professional services firm" that employs 115,000 people around the world, generated $4 billion in annual revenue as of 2021 and supports 800 global clients, according to its website. CEO Tiger Tyagarajan is credited with leading the company's transformation into an outsourcing juggernaut. Its origins date back to 1997 when it was a business unit within General Electric before becoming an independent company in 2005. Genpact maintains offices in Africa, Asia, Latin America, the Middle East, Canada, the U.S., United Kingdom and Europe.

Macrito said Genpact was chosen after a "very thoughtful and thorough review and bid process" with a number of outsourcers. Genpact was the best fit, he said, because of its "size and culture, scope of services, resources and industry expertise" and "a proven track record of success."

MacDonald said in his email that Genpact "has deep experience in the automotive industry" and will help CDK achieve "best practices, innovation and thought leadership used by leading technology companies."

Genpact, MacDonald added, can also tap into "a pool of talent" with "skills in digital platforms, tooling and software automation" that can boost CDK's efficiency and effectiveness.

"Given the tight labor markets in India and North America, it would take us much longer to recruit, hire and train the number of people we need" to support CDK's growth initiatives, MacDonald said.

Employees venting

CDK employees venting about the decision anonymously on the website thelayoff.com implied they faced some stark choices.

"Everyone I know is accepting the offer. There is no severance if you do not. We were all told by CDK manager that salary would be comparable. They won't see offer until later," one anonymous individual identifying as a CDK employee posted on the thread.

Some of the posters said their severance packages were already in place and that they would be departing CDK effective Nov. 1.