BT expects to axe 15,000 contract staff in the coming year

UK telco and IT services provider BT has shed 15,000 staff in the past year, and expects to see a similar headcount reduction in the coming 12 months, the company revealed today. As in the past year, most of these cuts will affect contract staff.

The company’s financial report, published today, shows that revenues for its fourth quarter, ending 31 March 2009, were up by 1% year-on-year to £5.4 billion. Profit, however, was down 40% to £429 million.

This profit figure was significantly impaired by a decision to write down more than £1 billion worth of revenue – over a given period – that it had previously expected to earn from two major IT services contracts.

The Global Services division continued to haemorrhage cash during the quarter, making a £198 million loss on increased revenues of £2.4 billion, a performance the company described as ‘unacceptable’. All other units showed slight revenue declines.

The operational review of BT Global Services that led to the £1 billion write-down also called for a new operating model for the division. It will now focus on ‘being the number one provider of networked IT service to corporate and public sector customers in the UK’, ‘providing networked IT services to key multinational customers’ and ‘creating a BT Global Services Enterprises unit consisting of a discrete portfolio of businesses addressing specific customer needs in key countries’.

“With a recovery programme for BT Global Services in place and our heightened focus on costs and customer service, we now want to accelerate our plans for our future networks,” said CEO Ian Livingstone in a statement. “We will examine doubling the pace of the roll-out of super-fast broadband next year within existing capital expenditure plans, bringing fibre-based services within the reach of more than a million homes and businesses and securing the jobs of 1,000 BT people.”

For Gartner analyst Scott Morrison, BT’s challenge is a technical one. “The need for BT to continue down the line of automation and industrialisation of its portfolio is now more urgent,” he wrote in reation to today’s revelations. “If it can get this automation right it will not only improve its margins, but should improve also the quality and consistency of its delivery, thereby positively impacting customer satisfaction levels.”

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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