BT in €1b cost-cutting drive

BT plans to shave more than €1.1 billion (£1b pounds) in costs in the current fiscal year in an attempt to increase free cash flow by over a third.

Addressing shareholders in London at BT’s AGM, chairman Sir Michael Rake, conceded that the last financial year had been a “difficult one.”  The plan to emerge “stronger from the recession” was to build a stronger business through focus on customer service, cost transformation and investing in next generation networks, the chairman said.

Describing the performance of BT’s Global Services unit as “unacceptable” and forcing the carrier to make a number of changes, Rake said the turnaround of that business would be a key priority in the year ahead.
During Q&A time CEO Ian Livingston revealed the company would radically pull back from its Indian outsourcing, relocating 2,000 call centre jobs back to the UK. The carrier said that it was part of its aggressive cost-cutting program and not because of customer service issues.

News reports have varied on the exact number of call center staff to be affected but a BT spokesperson was quoted by DowJones saying that by next year, “approximately 4,000 less people will be contracted in India than was the case in early 2008.”
BT currently has 11,000 customer-facing call centre staff in the UK.

Last year BT slashed 15,000 jobs, and plans to cut a further 15,000 positions this year after reporting a net loss of €96.5 million (£83 million) in the year to March.

Rake said BT had to be able to invest and compete in any other country in the same unrestricted manner in which non-UK companies can invest and compete here.

He said BT had invested billions of pounds in its network, which it made available to all communications providers on a fair and equal basis. "It was vital that others also share their assets on a fair and equal basis,” he said. He also welcomed Ofcom’s proposals to tackle distortions in the pay TV market but called on the regulator to act swiftly to enforce fair access to premium TV content.

Meanwhile, BT said it had won a Ministry of Defence contract worth €115 million (£99m) over five years for managed voice and data networks.