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Contractors fear more BT job cuts

'Corrective action' in face of £25m IT overspend

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Hundreds of IT contractors and agency staff working at BT face the chop as the monster telco looks to cut costs. The telco's IT budget is already £25m over budget and execs are now desperately trying to cut overheads and drive revenue to turnaround the deficit.

Some 250 contractors have already been told that they will no longer be needed from September. But this is understood to be only the first wave in a series of job cuts leaving contractors feeling unsettled about their future within the company.

At the same time, BT is looking to move some 2,300 permanent IT staff into customer-facing ICT activities by March 2006 potentially leaving a skills gap for supporting BT's own internal IT projects.

Insiders fear much of this internal work is to be offshored to countries such as India as the telco seeks to cut overheads.

A leaked document seen by The Register reveals that the telco is "committed to significantly reducing the amount that BT spends on IT" and notes that BT's IT division - OneIT - is "£25m adverse to budget".

In a bid to tackle this shortfall Al-Noor Ramji, CEO of BT OneIT, told workers that "we must act now - because failure is not an option".

He goes on: "The OneIT leadership team is putting in place immediate, corrective action to ensure we get back on track and accelerate our transformation."

A separate memo from the deputising director of Resource Management talks of "freeing up people through a combination of productivity and efficiency savings (doing the same work more efficiently with less people) and offshoring (doing the same work with lower cost people, typically in India)."

Insiders have told The Register that BT plans to reduce the number of IT contractors to zero by the end of the year with the work either to be taken up by BT employees or shipped overseas to countries such as India, although this is denied by BT.

"Hundreds more agency staff, many of whom accepted below-market rates in exchange for the relative security of working for BT, can expect dismissal notices later this year," one insider told us.

In a statement a spokesman for BT told us: "BT's 'OneIT' strategy is ensuring that BT has the IT structure, processes and people to support its ongoing transformation into a global networked IT services company.

"One element of the IT strategy is to refocus BT staff on to customer facing work that is currently fulfilled by contractors. With this in mind, BT recently released a couple of hundred IT contractors. At the same time, BT is working to offshore non-critical functions in order to achieve its efficiency goals." ®

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