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MP brands 1,600 CSC layoffs as the 'worst excesses of capitalism'

Government service provider 'propping up its share price' ahead of merger with HPE

Files in manager's desk drawers: manila folder marked "Redundancies". Image via shutterstock

The British government must wake up to service delivery implications of the latest mega-layoff scheming at CSC given the number of sensitive public sector contracts held, and work with the business and others to "root out the worst excesses of capitalism".

Or so Toby Perkins, Labour MP for Chesterfield, argued during a House of Commons debate relating to the 1,101 employees CSC put on the chopping block prior to January, in addition to a separate 399 job cuts announced in November and 100 in September. All are due to have left by the end of this month. CSC currently employs 5,500 staff locally.

"CSC has [outsourcing] contracts in a huge variety of sensitive government and corporate, including police services, HM Passport Office, civil nuclear and aerospace," he said. "I think it is fair to say that when CSC moves in, jobs often move out."

Other contracts are held with BAE Systems, Aviva, the Department for Work and Pensions and the Ministry of Defence. CSC had told Unite the union, according to the MP, that it was doing well and then the job cuts were confirmed, he said.

Fingers in government pies

On top of the consequences of the "operating methods", some "managerial and accounting failures" resulted in the botched NHS project that led to a $190m fine for over-reporting profits and the business is on its fourth UK boss in two years.

Perkins said Unite had told him that managers brought in from overseas were running the UK and were not familiar with the day-to-day running of the local operation and "cared little" about the importance of services to the country.

"Under the circumstances, redundancies of that scale should be a cause for real concern. However, when the company has experienced so much upheaval and has gone from one failure to another, and given the sensitivity and national importance of CSC's work, I think that the government should be very interested indeed," Perkins said.

The PM had worked to "defend free markets and to promote" Blighty as a place where enterprise is encouraged but "she would expect business and government to work closely together to root out the worst excesses of capitalism". Perkins asked if the "Cabinet Office is aware of the potential impact on government services" from the job cuts.

The latest layoffs (CEO Mike Lawrie has repeatedly cut jobs since he assumed the role in 2012) seemed to be "entirely" about the company cutting costs to meet financial targets, the MP claimed. He added that the looming merger with HPE's Enterprise Services, in which 12 individual directors stood to make $90m on successful completion, also raised concerns.

"How can we be confident that directors stand to accrue untold riches in the short term will take a long-term view about the best interests of the business, its employees and the customers who rely on it?" Perkins asked.

One big F-off failing biz

The spin merger of CSC and HPE ES can be seen as two failing businesses coming together to create an even bigger failing business. The top execs were appointed last month and in recent weeks the name of the new corporation was revealed to be DXC Technologies. But we'll park that for the time being.

Perkins concluded: "Although the tale of CSC's recent past includes rounds of redundancies, lost contracts, service failures and missed profit targets, followed by further redundancies and the whole cycle repeating itself, one area of CSC's business has seemed to grow. Many government contracts paid for by UK tax money are now being serviced by huge offshoring operations in India.

"There is a question for us in the House about how much GDP the UK is losing by allowing the government to outsource work to an American company that then effectively lays off UK staff in order to provide services to the UK government from India."

David Hobson, Labour MP for Delyn, asked if the government knew about the offshoring as it occurred and whether "they are concerned for future employment in the UK in such a highly skilled, highly confidential and highly sensitive business".

Around 25 to 30 per cent of CSC staff are based in India, but the firm is not alone in shifting their workforce to lower cost labour locations. So are IBM, HPE and Capita.

Many of us feel that the redundancies are being made as a knee-jerk reaction following disappointing financial figures for CSC, in order to prop up its share price before a merger with HP.

The continued chopping of the British staff base was "bound to have an impact on [CSC's] ability to provide... services" to public and private sector clients, said Mark Hendrick, Labour MP for Preston, where BAE and civil nuclear power production have bases.

He added: "Many of us feel that the redundancies are being made as a knee-jerk reaction following disappointing financial figures for CSC, in order to prop up its share price before a merger with HP. I am sure that when the merger takes place, many managers will exercise their share options to ensure that they make a good deal of money. Meanwhile, the workforce producing the goods and services is being sold down the river by selfish management."

Neil Gray, Scottish National Party MP for Airdrie and Shotts, said the workforce reductions should be of concern more so "as we approach the Brexit Britain landscape". He asked: "How will we ensure that such jobs are not only retained but attracted here?"

And Gill Furniss, Labour MP for Sheffield, Brightside and Hillsborough, claimed the "cuts are being rushed through, causing chaos within the company and huge dismay for CSC workers. Some of the roles are being offshored, but that is usually done in a controlled manner."

Haha, good April Fools'. Oh, you're not joking

Margot James, Parliamentary under-secretary of State for Business, Energy and Industrial Strategy, said she would start conversations with her counterpart in the Cabinet Office "to test out the assurances that he or she has been given" by CSC.

"In the past, I have been exposed to corporations that have been going through this process of rapid change. That can be very worrying, especially where software and computer contracts are the main focus, because there could be a load of the skills vital to the delivery of such contracts.

"In this country, we have had many concerns about public sector contracting for IT systems. It would be a reckless Minister who assumed that all we well, given the circumstances we have heard about this afternoon."

The HPE ES and CSC merger starts on April Fools' Day, and will be listed on the NYSE under the ticker DXC. According to an internal document seen by El Reg, the brand will be "built on a foundation of trust and transformation".

The new brand might help "bury the identities of two now quite toxic companies", a source at CSC told The Register. "What adds salt to the wounds of the rapidly decreasing numbers of employees is that they have clearly spent a lot of money on consultants to come up with the pathetic corporate speak attempting to justify it, that we have heard that millions of dollars have been earmarked for the rebranding exercise, and that top management are going to walk away with even more millions of dollars in bonuses when the merger completes."

CSC stated in an SEC filing in November that its top exec could received a total of $90.5m in stock, options and severance payments following the merger with HPE ES.

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