Transcend- Big Profits from taking away employee benefits and - sending work offshore

Ms. McGrogan continued: “Let me speak more specifically to our profitability improvement initiatives. Effective December 31 ^st, we have shut down our Delhi, India operations center and re-allocated work to our Bangalore center and third party partners to improve quality and reduce cost. We expect this change to result in cost savings of approximately $0.9 million per year. Effective February 1 ^st, we re-aligned our operations team, which we expect to generate $0.7 million per year in savings. These two changes, which total $1.6 million, should improve our gross margin as a percentage of revenue by 1.2% at fourth quarter 2011 annualized revenue levels. Looking forward, we plan to further improve Bangalore capacity utilization and transcriptionist efficiency. Domestically, we will focus on migrating off of third party transcription platforms, particularly in situations where we pay license fees to use the platform, and I will be disappointed if we can’t add at least a half point of gross margin by the end of the year related to this initiative. We also plan to improve the percentage of the volume on our BeyondTXT platform that is edited using speech recognition technology to 90% by year-end from 83% in the fourth quarter, which could result in another $0.5 million of annualized savings once the 90% level is reached. And the good news is that we expect these initiatives to result in either no change or improvement in customer satisfaction.”

Lance Cornell, Chief Financial Officer, added: “We were very concerned about the increase in our health insurance costs in the fourth quarter. We are self-insured, but we do have stop loss insurance that will increasingly cap costs in the second half of our plan year, which ends June 30 ^th. We’ve also taken immediate measures to re-classify 145 employees from full time to part time effective February 1 ^st, removing them from benefits at a savings of approximately $0.4 million per year.