British Telecom Group Plc (BT), the UK’s largest phone company, aims to cut about 6% of its workforce by March 2009, to improve profitability after reporting a slide in second-quarter earnings.
Most of the 10,000 cuts, out of a workforce of 1,60,000, will be in the area of “indirect labor” such as agency, contractors, subcontractors and offshore workers, the company said in a statement today. BT’s earnings before interest, taxes, depreciation and amortisation fell 1.3% to 1.43 billion pounds ($2.1 billion) in the second quarter.
A lot of the offshore work for BT is done by Tech Mahindra, BT’s IT services joint venture with the Mahindra Group, which focuses on IT solutions for the telecom industry, and some other IT companies in India.
BT surged the most in six years in London trading. The economic downturn makes it more difficult to win new clients and complete contracts, CFO Hanif Lalani said in a TV interview today.
About 4,000 positions of the planned 10,000 have already been slashed, BT said. Job cuts among people working directly for BT will be largely achieved through natural turnover, the company said.
BT gained as much has 14.2 pence, or 13% to 126.7 pence, the biggest intraday surge since September 2002.
The stock, which had lost 59 % this year, traded at 124.7 pence as of 8:38 am in London today.
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