O'Callaghan: HMH outsourcing

Barry O'Callaghan's publishing company Houghton Mifflin Harcourt (HMH) is to lay off 65 staff in the US following a decision to outsource its IT services. HMH has opted for the redundancies at its operations in Boston and Florida having signed a deal to purchase information technology services from global outsourcing firm Cognizant Technology Solutions. The deal will see Cognizant take responsibility for HMH's application development and maintenance, however the company's existing IT department will continue to look after strategy, innovation and customer relations. A spokeswoman for HMH in Ireland said the lay-offs were confined to US operations in relation to positions rendered unnecessary by the outsourcing.

The redundancies come as HMH's parent company, Education Media & Publishing Group, prepares to release details of the massive restructuring of its €7.1bn (€5.1bn) debt.

The plan will see a range of unsecured debt holders including Istithmar World Capital, Merrill Lynch and Apollo Management take up to 45% of the company in exchange for $1.2bn (€842m) in debt. The move will reduce O'Callaghan's stake in the company with some estimating it could fall to below 20%. The restructuring will also see holders of EMPG's senior debt of €4.8bn asked to take a 1.5% reduction in the interest rate applied with the promise that a greater portion of that interest will be paid in cash.

HMH is one of the biggest education publishers in the US but it has been seriously affected by the recession with US schools facing ever tightening budgets, some even abandoning books in favour of internet resources. It was created when O'Callaghan's Riverdeep acquired school book providers Houghton Mifflin and Harcourt Education in multi-billion dollar deals.