Telefónica accused of being irresponsible
The Communications Workers Union (CWU) has accused Telefónica UK of being irresponsible with its outsourcing strategy, putting livelihoods at risk and eroding employee rights and benefits. The union has pointed out the obvious point that outsourcing from an employee perspective can be a risky business.
For example, the rights of employees being outsourced is protected by the acquired rights directive under EU law so in principle they can continue with the new employer with no reduction in their employment rights. However, it is far from certain whether they can return to their old employer should things go wrong especially if the outsourcing company changes its business model in the interim and the outsourced functions no longer exist, or, where the contract is re-let to another outsourcer who delivers the service in a fundamentally different way. This can be exacerbated several years down the line when the contract could change hands several times.
The CWU points out correctly that should a third-party supplier ‘get into bother’ there are few assurances outsourced employees would be readmitted on the same terms and conditions as they used to enjoy with their ‘old company’. The CWU also seems to be hinting at nefarious strategies to reduce risk and corporate responsibility for employees is taking place such as using outsourcing to get rid of employee’s surplus to requirements.
Employees can get caught in the middle
As a small vignette several years ago, a company I was involved with provided IT services to a major UK chemical industry player and had taken over their staff entirely. When the contract came up for renewal the IT services were re-contracted to a new supplier who established a new mechanism for services delivery and refused to take over the ‘old support staff’. The chemical outsourcing company also refused to take its employees back and said ‘it’s your problem’ and the supplier, caught in the middle, had to carry the high redundancy cost of staff – So it does happen.
Here is an extract from a post on this topic from telecoms.com that goes into more detail:
“Back in 2013 the CWU vociferously objected to the outsourcing of the thousands of jobs in the Voice Channel and escalated the issue to the then CEO, Ronan Dunne, expressing our dismay,” said CWU Assistant Secretary Sally Bridge.
“We stated then that we did not believe that outsourcing to a third party supplier was in the best interest of the customer or Telefónica as a business – and in February we once again raised the question as to why Telefónica would want to continue to risk using Capita to handle a major piece of its customer-facing work.”
Telefónica has been on a mission to reduce operational cost over recent years, though the company’s position has always been that of voluntary redundancies and not replacing those who retire; this is certainly a different rhetoric than the more reprehensible suggestions from the CWU. Looking at the numbers, the headcount stood at 122,718 at the end of 2017, down from 127,323 a year earlier.
Streamlining the order of the day in Telco
Streamlining the workforce is not a new trend we are seeing in the telco space, but what needs to be ensured is that it is being done responsibly. A couple of weeks ago BT announced it was trimming 13,000 jobs, and Vodafone also announced it was cutting thousands across its international operations, while increasing pay-outs to the management team.
It not an uncommon occurrence for the telcos to be their own worst enemy, this is a scenario which has been created by the blood-lust of the rest of the digital ecosystem. OTT players has continued to destroy the cash-cow business models in the telco space, SMS and voice calls, while simultaneously encouraging the consumer to be more demanding and data-intensive. The telcos are less profitable and expected to underpin (and fund) the growth of the digital economy. With such an unbalanced equation, there are always going to be difficult decisions to be made.
Some might point towards a lack of foresight and innovation from the telcos, suggesting inaction and reliance on dated business models was the cause of such fiascos, however the economy which sits on top of the infrastructure, getting the first pick of the profits, has been biting the hand which feeds it for years. Little concern has been offered to the telcos who are expected to uphold the digital experience, yet not been offered a share of the digital bounties.
The difficult position telcos are finding themselves in has been thrust upon them, though we would hope there is an element of responsibility and finesse when making the tough decisions.