IT Jobs
BT takes axe to workforce as services unit struggles
Offshore and subcontractors to bear the brunt.
By Jeremy Kirk, IDG News Service
Published: 15:20 GMT, 13 November 08
The former UK telecoms incumbent, BT, has announced that is to axe 10,000 workers as it seeks to cut costs and improve profitability at its services branch.
Most of the job cuts will come from indirect labour, such as subcontractors and offshore workers. BT has already let go 4,000 workers and the remaining 6,000 cuts will be complete by the end of its financial year on 31 March, 2009.
BT's overall revenue increased to £5.3 billion ($7.86 billion) for the second quarter ending 30 September, up 4 percent from the same period a year prior. But operating profit before specific items and leaver costs was down 1 percent compared to the same quarter a year prior, to £744 million.
"In today's environment and today's economy, that's not the worse result you'll see, but we were of course disappointed," said Ian Livingston, BT's chief executive, in an online video interview.
BT said three of its main business units - BT Retail, BT Wholesale and Openreach - met expectations for the company's second quarter and half-year results. But BT Global Services, which provides networked IT services to enterprises, suffered from increasing costs which cut into its profit.
Revenue for Global Services came in at £2.1 billion for the quarter, up from £1.9 billion a year prior. But profit fell to £611 million from £663 million, an 8 percent decline.
The head of Global Services, Francois Barrault, resigned from his position 30 October, and has since been replaced by Hanif Lalani, who was group finance director. BT said Global Services still had compelling products, citing a total of £8.4 billion in new contracts over the last year.
One of BT's major infrastructure projects, the 21st Century Network, is now serving 8 percent of the UK market with wholesale broadband services up to 24 Mbits/s. By April 2009, BT plans to deliver those services to 40 percent of the market and 60 percent by March 2010, the company said.
BT also cited progress with its fibre optic broadband program even though the UK has been relatively slow in installing faster broadband infrastructure. BT is installing fibre to homes in Ebbsfleet, a city east of London, that can theoretically handle speeds up to 100 Mbits/s.
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