Resources Connection Inc., a provider of workers for human resources, finance and technology, unexpectedly moved its headquarters out of state after almost 30 years in Orange County, effective Nov. 1.
“Texas offers a more central location for RGP to provide service and support to clients around the world,” a spokesperson for the company, commonly known as RGP, told the Business Journal. “The timing is aligned.”
The company in August sold its Irvine headquarters and entered into a lease for another Irvine office “to replace the recently sold Irvine office building,” according to its quarterly report filed last month with the Securities and Exchange Commission. That Irvine lease for $700,000 a year was scheduled to start Nov. 1 and expire in 2032.
The company has run into headwinds in recent years that have forced it to restructure.
Sales at the company fell 18% to $632.8 million in fiscal 2024 and analysts are projecting a 6.3% drop this fiscal year to $592.8 million. Chief Executive Kate Duchene attributed the decline to an economic slowdown.
Its shares have dropped about two thirds in the past two years to around $8.13 and a $272 million market cap. Its stock has hit the lowest price since 2002 (Nasdaq: RGP).
Employees were told about the move only a few days before it was announced, a source told the Business Journal. The company, spun out of Deloitte & Touche in 1996, has 757 employees who are referred to internally as professional consultants. They work with Fortune 100 and 500 companies who need to fill positions in a range of positions including finance, HR, technology and supply chain.
“Employees should not experience any change in processes or procedures with this transition,” the spokesman said.
The company couldn’t say how many of its 200 employees in Orange County will be moving to Dallas.
HQ Sale and New Irvine Lease
The company originally paid $9.8 million for the former 57,301-square-foot HQ facility in 2005, according to records from real estate market tracker CoStar Group Inc. The city of Irvine bought the building for $13 million in August, according to the company’s filing with the SEC.
“We found that people are working differently now, and we didn’t need that amount of real estate,” Duchene told the Business Journal last month, referring to remote work caused by the pandemic.
The city plans to use the building to expand its operations and permit a reconfiguration of Irvine’s existing, 191,000-square-foot Civic Center at the intersection of Alton Parkway and Harvard Avenue “to address both city council expansion and Police Department related space needs,” according to city records.
Officials previously reported that RGP had leased a new 18,178-square-foot-building in Irvine at 2030 Main St. after the HQ sale. This location will operate as a service center “providing finance, HR, IT and other operational support for global employees,” RGP said.
Less Activity Among Clients
RGP recently shifted and redesigned its operational model to better showcase its different business segments and drive growth in a tougher economic landscape, according to Duchene.
The reorganization comes as the company has seen many of its clients put projects on hold over the past year.
The firm has three principal business segments: On-Demand, Veracity for next-gen consulting and Countsy for outsourced services.
For the On-demand segment, the firm places its people within companies to step into specific projects under an executive leading the venture, whether it’s employee changes or technology transitions. The consulting division is designed to help companies with “transformational initiatives” from start to finish.
In RGP’s outsourcing business, which began with startups, the firm’s consultants are employed as a third-party group to build infrastructure such as HR and financial departments, or a back-office team, for companies who do not have additional staff or funds.
The fiscal first quarter ended Aug. 24 also marked RGP’s first time reporting revenues for each segment. Total first quarter sales fell 20% to $137 million.
Duchene who has been CEO since 2016, last month said businesses have been tightening their budgets in fear of a recession this past year.
“There have been less transactions happening in the marketplace,” she said.
Duchene added the newly defined segments “is a way to clarify what we bring to the market.”
