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BT to shed 10,000 workers

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David Meyer ZDNet.co.uk

Published: 13 Nov 2008 13:25 GMT

BT plans to let go of 10,000 workers by the end of March next year, the communications and IT giant has announced.

The job cuts were announced on Thursday, along with BT's second-quarter financial results. Four-thousand jobs have already gone since the start of this financial year in April 2008, the majority being people not directly employed by BT with IT contractor and management consultants affected in particular. The other 6,000 job losses will be split roughly 50-50 between direct and indirect employees.

Most of the direct-employee cuts will be UK-based, with the indirect-employee cuts being a mix of UK and overseas positions.

A BT spokesperson told ZDNet UK that the reductions were "primarily about BT reducing its dependence on consultants and contractors". The company's headcount of direct employees is expected to drop by four percent by the end of this financial year, while the indirect-employee headcount is expected to drop by 12 percent.

BT's spokesperson denied the job cuts were a result of the recession, saying they were a part of an £800m cost-savings plan that had been announced to the City at the start of this financial year. The spokesperson also pointed out that BT typically lost around 7,000 employees each year through workers moving to other employers, retirement and voluntary redundancy.

"In previous years, we have tended to recruit as many new people as leave, but this year, we want a net reduction of 4,000 direct staff," the spokesperson said. "We will therefore achieve the reduction in our direct staff largely by natural turnover. We have always achieved reductions in staff through voluntary schemes, and that will be our aim this time as well."

Across BT's business, EBITDA (earnings before interest, taxes, depreciation and amortisation) were down one percent year-on-year. BT Global Services, however, saw EBITDA down by 36 percent over the same period.

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"Three out of our four business units, BT Retail, BT Wholesale and Openreach, are delivering on or ahead of target," said Ian Livingston, BT's chief executive, in a statement on Thursday. "But profits in BT Global Services are simply not good enough, and we are taking decisive action to put matters right. We have appointed Hanif Lalani as the new CEO of BT Global Services, and he will continue to grow the business while reducing the cost base."

The resignation of Francois Barrault, former chief executive at Global Services, was announced at the end of October along with a profit warning for BT Global Services. Lalani, previously BT's chief financial officer, has been in his new role for around two weeks. His replacement as CFO is Ray Leclercq, who was previously CFO for BT Openreach.

Also on Thursday, BT announced it was raising its retirement age from 60 to 65. The main unions representing BT staff are the Communications Workers' Union (CWU) and Connect, and both unions have recommended that staff accept the changes.

"The situation facing BT's UK pension schemes is serious and this, combined with the wider challenges facing the company and the current economic situation, means that it is essential to take action," read a Connect statement directed at its members. "Crucially, this agreement would bring long-term stability and sustainability to BT pensions, as we have secured a legally enforceable agreement to protect your pensions now and for the future."

CWU general secretary Andy Kerr said in a statement on Thursday that his union would hold Livingston to his promise that any redundancies would be voluntary.

"Ten-thousand jobs is a huge number, and it will be difficult for BT to shed that amount in one year," said Kerr. "We'll be holding BT to their statement… that there will be no compulsion to meet these cuts. The CWU will oppose any compulsory redundancies by whatever means necessary. We have a meeting set up with BT to discuss the detail of how these reductions will be implemented. We'll be emphasising voluntary redundancies and natural wastage, but this is clearly far from an ideal situation for BT employees."