At least 10,000 Telstra contractors are expected to be cut over the next two years as part of the telco’s far-reaching T22 transformation program, according to the company’s CEO Andy Penn.
“By June 30 we expect to have announced around 75 percent of our direct workforce reductions,” Penn said at a Morgan Stanley Summit on 4 June. “Over the past year we have also reduced our indirect workforce by 5,000 and we would anticipate reducing this further by over 25 percent in the next two years.”
Telstra’s T22 strategy is aimed at improving the telco’s underlying earnings in an increasingly dynamic, competitive market and, in large part, mitigating the impact to the telco of the National Broadband Network (NBN) rollout.
When the T22 strategy was first announced in June last year, the company flagged it would result in 9,500 total job losses in addition to 1,500 new jobs created, leading to a net reduction of roughly 8,000 direct employees and contractors over the following three years.
In February this year, when Telstra announced its results for the six months ending December 2018, Penn updated shareholders on the company’s T22 progress, noting that, in addition to the culling of roughly 8,000 employees, the 40,000-strong workforce of Telstra’s industry partners that provide a range of services would also be affected.
“We are also continuing to target non-direct labour,” Penn said at the time. “This includes some of our indirect workforce. Our industry partners who provide technology, consultancy and other services have a workforce of approximately 40,000 supporting Telstra.
“As we simplify our business and optimise costs, we expect the total number of people our partners employ to work on our business to decline. The indirect workforce is also expected to decline as a proportion of our overall workforce,” he said.
As reported by the Australian Financial Review on 4 June, Penn’s latest estimate regarding Telstra’s indirect workforce equates to an expected cull of at least 10,000 contractors, with the telco looking at reducing its total direct and indirect workforce by close to 20,000 roles by 2022.
However, Penn has readily acknowledged potential impact on workers, both direct and indirect, flagging that the company has put some effort into providing support for affected workers.
“The human dimension of these numbers is very challenging. That is why we have an extensive program of support in place,” Penn said at the Morgan Stanley Summit.