Claims offshore outsourcing to ripple through the ranks at The Warehouse Group

Saturday, 20 December 2025

In September, The Warehouse Group told the market it had “partnered” with Mumbai-based Tata Consultancy Services to “support the next phase of its transformation, focused on simplifying the group’s technology stock” and saving $40 million in IT costs over five years.

However, sources who have spoken to The Post on condition of anonymity said the company had “not been 100% honest with their communications to the public” about the outsourcing.

“They’re not making jobs redundant. They’re cutting staff here and picking them up in India,” said the source.

Staff were called into meetings in November, and some in early December, and told that their employment would be coming to an end.

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“It came as a real shock to all of us. We were called into a meeting team-by-team on a Wednesday, and each team was given 15 minutes, and we were told of this, and as we were leaving, the next team of people was being brought in,” a source told The Post.

“People were told they won’t be given their notice until the training of Indian staff is complete, and then they’ll have a month’s notice once they’ve been trained.”

Training for some teams included “training the trainers” employed by Tata, who would then recruit staff as needed and have their trainers train them.

“I feel pretty bad. That’s a pretty tough pill to swallow” said one source of the arrangement.

Wider than IT

The Post has been told proposed job cuts at The Warehouse head office have so far touched finance, IT, property, shipping and legal teams, with at least 80 roles from a single department expected to come to an end in February ‒ once replacement staff, or in some cases trainers, in India, have been trained up.

“As we are so early in this process, we are not in a position to share any specifics around working practices,” a spokesperson for the company said when asked about this.

Further cuts, including to the buying, merchandising and marketing teams are expected to come in the new year.

Between 400-500 jobs of approximately 1000 at head office are expected to be disestablished as part of proposed redundancies at the group, which employs 11,000 people across its entire business, including retail stores.

Frontline staff, The Warehouse Group has said, are not affected by the cuts.

There has been a marked rise in the number of New Zealand companies turning to outsourcing jobs to workers in countries with cheaper labour in recent years, with the likes of ANZ, BNZ, Spark, Air NZ and many others having turned to this solution. The trend has only accelerated as the cost of living has hit spending, and profits.

Ikea, Walmart and Wesfarmers, owners of Kmart, also use Tata Consultancy Services.

The Post put what it had heard from sources to The Warehouse, which called some of the claims “speculative”, and said it had shared its “cost reset” programme publicly.

“This programme is essential to reduce costs now and recover profitability, while investing in areas like our stores, pricing, and product range, to deliver a better customer experience and secure our long-term future,” said Warehouse Group chief executive Mark Stirton, who was brought in to revive the ailing retailer’s fortunes on August 1.

“As part of this, we have proposed changes to our head office structure and are exploring co-sourcing some head office roles with Tata Consultancy Services (TCS). TCS are a delivery partner with additional capability and necessary expertise to drive our turnaround and improve how we serve our customers; they are not a traditional consultancy firm like those that the group has used in the past.”

The company would not confirm numbers of roles affected, saying “we understand the effect this has on our team and their families, and we are committed to supporting them throughout”. But the need to streamline the business was compelling, with the company having admitted it took its “eye off the ball on changing customer expectations”.

The group is targeting savings of up to $40m over five years by working with Tata.

Bedding in

The sources spoken to by The Post say it is true The Warehouse’s IT system was a problem. Tata was the third company The Warehouse had called in for help to try to fix it within two years.

After decommissioning the original system from Oracle, the company brought an off-the-shelf, ready-made solution to save money ‒ only to cause itself years of ongoing problems. Even now, one source said the problems were not entirely ironed out.

But sources who still work within the business claim the introduction of Tata on the pretext of saving the company $40m in IT costs was a smokescreen for much vaster change the company intended to make.

“They consulted on their own on the issue, and then said ‘here’s how we’ll fix them, we’ll take our business to India’. That’s the feeling a lot of us got.”

The Warehouse Group had continued to battle in 2025. In July, the company downgraded its earnings forecast to an operating profit of between a $5m loss and a $5m profit, the lowest projection of the year.

And that was before Ikea had pitched up in Auckland. The owner of The Warehouse, Warehouse Stationery and Noel Leeming has struggled with a dwindling customer base in recent years, watching the likes of Kmart eat its lunch, as its ranges have fallen out of fashion and failed to woo shoppers.

It has been open about how it “lost focus” and was “too ambitious” with previous strategies, and has spent the past year embarking on what it calls a turnaround to reset its strategy, product offering and pricing and organisational structure.

Stirton, formerly the company’s chief financial officer, took the reins of the company in August, filling the role held by Nick Grayston, who left abruptly in May. Stirton is an accountant by trade and it was widely expected by the troops that cuts would be made following his appointment.

“He knows his figures, and our feeling is that if you put an accountant in charge of the business, he’s going to cut costs rather than spend money or look at changing the company,” said a source to The Post.

“A lot of us believe he’s probably a great accountant, but whether he has the wherewithal to turn the company back around, we’re not so sure.”

The radical cost-out measures had been foreshadowed to staff in a form sent to them at the beginning of the effort. Ideas were sought on how the company could further reduce costs: “things like photocopying, toilet paper, all those kinds of things that they could cut. They've taken photocopiers away to restrict or limit use, things as small as that.

“But they're not focusing on the fact that we're still not competing with Kmart. We’re getting numbers through, but people aren't buying stock at levels that they are there,” said a staff member.

“They don't understand the market. They're not selling what New Zealanders want, and the stores just never feel great, they've lost their connection.”

Workers First Union represents 1280 frontline retail workers at The Warehouse, but has no head office membership and was not privy to information about redundancies and consultation impacting these staff.

Nevertheless, deputy secretary Rudd Hughes, called it “insulting” to lay off staff and expect them to train their replacements.

“The idea of training your replacement overseas on how to do your job is really insulting and would make most people shudder. It just adds insult to injury and shows how nakedly greedy and tone-deaf some companies can be,” Hughes said.

Rise in offshore outsourcing

Hughes said the level of outsourcing big New Zealand companies were turning to ‒ to ensure, in some cases, they were still distributing handsomely to shareholders ‒ was having dire consequences for the economy and the quality of life of New Zealanders.

“Instead of adjusting their expectations or accepting slightly slimmer margins, companies are seeking to maintain the same profit levels by reducing their costs, and workers are the ones paying for it,” he said.

“In a cost of living crisis, people who are made redundant suffer even more, especially given the eroding social safety net under this Government and the lack of good job creation to make up for any outsourcing.

“Outsourcing can be invisible to many of us. Rather than just creating redundancies, companies also aren’t creating as many jobs because they are outsourcing roles before they exist in practical terms. It’s reflected in less jobs created and a boom for offshore services with cheaper labour.”

Hughes said offshore outsourcing did not only happen at the level of whole jobs, but often involved specific tasks or processes being outsourced too, and often meant people ended up taking home less pay even if they don’t lose their jobs.

It meant people did not have the same opportunities to upskill and advance their careers.

“It also means a worse service for New Zealanders in the businesses where jobs are sent offshore – less local knowledge, less good advice, and less of a connection to our country. Companies who outsource work to companies overseas also turn a blind eye to potentially dangerous issues like forced labour, exploitation and damaging employment conditions that harm workers in countries with poor protections in place.”

He said offshore outsourcing “hurts our workers and it hurts our country”, and as a result, a lot of New Zealanders were now ‘offshoring’ themselves in search of better jobs and pay.

Companies also use outsourcing by contracting labour hire firms to casualise employment, which Hughes said was also a major problem in New Zealand.

This kind of outsourcing allowed the employer to avoid the obligations of real employment – like sick and annual leave, holiday pay, and collective bargaining – by bringing in a service provider to supply casual labour without any ongoing duty to workers.

It was happening across the economy, from supermarkets and distribution centres to warehouses and horticulture operations, he said.