Delphi looks to outsource finance processes to Genpact International

By Caroline Salls

Pittsburgh, April 2 - Delphi Corp. requested court approval of a finance outsourcing agreement with Genpact International, LLC that is expected to save Delphi $150 million over the term of the agreement, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The agreement provides for the outsourcing of some of Delphi's accounts receivable, accounts payable, fixed assets, travel and expense reporting, general ledger and contract administration processes.

According to the motion, as part of its transformation plan, Delphi is looking to reduce costs by outsourcing the processes to a qualified service provider, which will enable the company to reduce significantly the number of internal employees performing the processes.

Additionally, Delphi said it expects to improve productivity over time by reducing the number and type of unique, non-common systems, moving to common operating platforms and running a streamlined shared service organization.

After roughly $78 million in one-time transition costs, Delphi said it expects $150 million in net operating savings over the 88-month term of the finance outsourcing agreement.

Delphi said its total costs to Genpact over the life of the agreement will be $180 million to $220 million.

Monthly operating expenses and one-time transition costs will be charged directly or allocated to either Delphi or the Delphi affiliate that use the services, with an estimated 38% of operating expenses and one-time transition costs expected to be borne by the debtors and the remainder being borne by non-debtor affiliates.

A hearing is scheduled for April 20.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, filed for bankruptcy on Oct. 8, 2005. Its Chapter 11 case number is 05-44481.

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