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BT to cut 4,000 jobs in digital transformation plan

BT is to cut 4,000 jobs as it tries to realign Global Services business for a digital world and recover from a massive corruption scandal

BT will take the axe to 4,000 jobs over the next two years, as it seeks to save £300m through a restructuring programme across its Global Services, Group Functions and Technology, Services and Operations (TSO) units.

The bulk of the cuts are expected to come at its Global Services unit, which is to undergo a major strategic review. BT said this review of Global Services will help it deliver a more digital business, prioritising innovation in the cloud and reducing reliance on local network assets.

The review also comes partly in response to the accountancy scandal at its Italian business, which was first reported in January 2017 and has cost BT around £528m so far.

The scandal also cost BT’s European president and several senior Italian execs their jobs after the internal investigation conducted with the help of auditors KPMG. BT CEO Gavin Patterson is also to forfeit his annual bonus, which could have been worth up to £4m.

The investigation exposed improper sales purchase, factoring and leasing transactions, and identified incidents of collusion, circumvention and override of controls over several years that BT’s own monitoring processes had not spotted.

“We’ve undertaken a strategic review of Global Services,” said Patterson, as BT revealed its fourth quarter and full year results to the market. “Technology trends mean we are now less dependent on owning physical local network assets around the world, creating the opportunity to reposition Global Services as a more focused digital business.” 

“We’re also accelerating and expanding our cost transformation programmes, most significantly in our central Group Functions, in TSO, as well as in several other lines of business. This will help offset market and regulatory pressures and create the capacity for future investment.”

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BT had thought that its troubles with Global Services over the years – which lost over a billion pounds after contract overruns with the NHS and Reuters in 2009 and was even threatened with being sold off after a previous restructuring three years ago – were behind it.

Indeed, in a 2015 interview with Computer Weekly, Patterson said demand from multinational enterprise customers for single network systems from single suppliers along with service overlays was increasing, which could only be good news for Global Services.

Reflecting on a challenging year for BT

In his statement, Patterson looked back on a challenging year for BT, with headwinds in UK public sector and international corporate markets and a hefty fine for its broadband infrastructure wing Openreach also causing difficulties.

Some bright spots included the largely successful integration of the EE mobile network business, and the conclusion of an agreement over the future of Openreach, which BT hopes will end a lengthy period of uncertainty and controversy surrounding the business.

Fourth quarter sales were up 10% to £6.122bn, up 10% year-on-year, while pre-tax profit fell 48% to £440m. Full-year sales were up 27% to £24.06bn, while pre-tax profit dropped by 19% to £2.35bn.

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