Heads keep rolling

Research conducted by Comm. shows that close to 100,000 job cuts have been announced by major global telecoms operators and suppliers since January 2008, with the number of redundancies looking to increase further in 2009. Michelle Mills reviews the rationale behind the job losses and looks to quantify how many more jobs are likely to be lost before any recovery occurs

As the February issue of Comm. was going to print, US operator Sprint Nextel announced the axing of 8,000 jobs at the operator, adding to the mounting toll of telecoms redundancies. Combined with the 4,000 positions the challenged CDMA/WiMAX/iDEN operator axed in January 2008, the numbers place it on par with fellow US provider AT&T, as telecoms outfits that have announced significant job cuts over the past 13 months.

Sprint Nextel, which as of the end of September 2008 had more than US$20 billion in debt, faces issues beyond the economic slump, having been losing subscribers rapidly over the past year due to claims of bad service, resulting in churn. The latest 8,000 job cuts at Sprint Nextel, announced last month, represent approximately 14 per cent of the operator’s overall workforce of 56,000, and it is anticipated the cuts will result in a reduction in expenses of US$1.2 billion. Sprint Nextel reported that about 850 of these positions have been removed through a voluntary buyout plan it started last year, the result of which the operator expects to add US$300 million in costs for severance packages during the first quarter of 2009.

The UK’s BT, very much the vanguard of next generation technology and forward looking strategies in the past decade, has succumbed somewhat to the economic downturn in Europe. In November the telco announced the elimination of 10,000 jobs.

Compiling all the announcements of redundancies made by major telecoms organisations in the past 13 months, job losses at operators accounted for 55,000 or 59 per cent of the total 93,000 redundancies. Vendor lay offs accounted for 32.5 per cent, while enterprise communication specialists cut the remaining 8.4 per cent of jobs.

While these figures are by no means conclusive, they do offer an insight into the general trend of retraction that is occurring in the telecoms space, as is occurring in arguably every other sector globally. Breaking down Comm.’s figures geographically, companies based in the Americas registered the highest number of job cuts, accounting for 41,550 jobs or 45 per cent of the overall cuts, mainland Europe 36,170 jobs or 39 per cent, with the UK alone announcing 15,200 job cuts or 16 per cent of the total.

While the Americas, mainland Europe and UK have dominated redundancy announcements over the past 13 months, it is increasingly likely telecoms employees in the Middle East will also face job reductions should the global economy not pick up

It appears that the previously high-growth regions of the Middle East and Asia have not suffered the extent of job losses as in developed markets, though the global nature of modern economies means the impact is likely to be felt in previously buffered regions should the downturn persist. Nokia Middle East, for instance is believed to be reviewing its regional staff compliment, with the view to possibly cutting back numbers during the course of 2009.

And with STC reporting a 62 per cent slump in profit for Q408, it remains to be see how much longer players in the telecoms sector in the Middle East will be able to sustain current employment levels in the face of a tightening economic outlook. The reality of the times is thus firmly in place in the region. Last year, Omantel’s CEO Mohammed Al-Wohaibi told Comm. exclusively that job redundancies would occur at the telco as part of the process to reintegrate mobile subsidiary Oman Mobile back into the fold.

However, Abbed Anabtawi, head of telecommunications in the MEA region at Dubai-based executive recruiter RP International (RPI), believes the region’s human resources are somewhat buffered from the financial crisis for the time-being. RPI has many operator clients across the region, and Anabtawi says that so far he is not aware of any clients that have made the decision to cut positions, or have any intention to.

“In the telecoms sector in the region today, there are many deals that have gone too far down the line to be stopped or for the plans to change,” says Anabtawi. “We are still busy with the usual clients who are growing steadily. At this stage, there’s still a commitment from the operators to continue to grow their business, turnaround their organisations, or to launch their greenfield operations or licences they’ve just acquired,” he adds.

Abbed Anabtawi of telecoms executive recruiter RPI says he is not aware of Middle East operators that have cut back benefits, salaries or bonuses for senior executives

Indeed, research by Comm. published in January showed that there are more than 30 countries across the Middle East, Africa and the Indian sub-continent, where operators have very recently launched commercial telecoms services, or have intentions to do so in the coming half year. It is unlikely that these operations will scale back their efforts too significantly at the critical time of launch.

“Everyone recognises that 2009 will be a tough year but I feel optimistic in that there is a great deal of commitment from the operators to keep going strongly in the Middle East. We are yet to see cut backs of benefits, salaries or bonuses for c-level officers either,” Anabtawi comments.

However, it is clear that as uncertainty persists there is a level of nervousness with regard to future prospects of the telecoms and other industries in the region. Another telecoms and ICT executive recruitment firm contacted by Comm., declined to comment on how the world economic slowdown is impacting recruitment in the regional sector, stating it preferred not to comment on the extent to which the global issues affected the regional telecoms sector.

Click on table to see larger view.