Exciting technology developments don’t necessarily lead to easy money in telecoms… 5G, fibre-to-the-home, edge, artificial intelligence (AI), Internet of Things (IoT), autonomous cars, blockchain, etc… All of these are where land- and wireless-based telecoms have a key role to play.
But competition from over-the-top (OTT) players, industry compliance and government legislation and other factors like hefty pension deficits among incumbent operators are eating into the bottom line, and causing lower profits, says Antony Savvas.
And despite the automation available to streamline operational costs, customer expectations about what the new technologies should be able to deliver, mean that operators can not simply shave their customer support and experience staff numbers to the bone. Although some might be trying to do just that, going by the job cuts in the industry that have been announced over the last nine months or so.
As of the end of June 2018, four of the world’s biggest service providers – BT, Telstra, Telecom Italia and Deutsche Telekom – had announced plans to cut over 35,000 jobs between them, representing around 8% of their total headcount. And these cuts are ongoing with some speculation that they may well be increased in number.
Automation, mergers and efficiency targets (often demanded by the financial markets) were the chief reason for these cuts.
In India, last autumn, consulting firm Randstad India estimated the country would see between 50,000 and 75,000 telecoms jobs go, as a result of mergers and consolidation and reductions in customer support and financial functions, for instance.
Randstad said it believed the Indian telecoms industry could shrink by a further 5-10% over the next 12 months, which could equate to tens of thousands of more job losses.
Related industries are also not immune either, with telecoms network provider Nokia warning of job losses at the end of last October after posting poor financial results, despite it being at the forefront of 5G roll-outs along with the likes of Ericsson and Huawei.
And in November 2018, Telecom Italia was again in the frame as a result of the Italian government’s aim of creating a single broadband company that would bring together the networks of Telecom Italia and Open Fiber. But such a move could lead to significant job cuts, with Reuters reporting sources that suggested a merger could lead to 10,000 job losses at Telecom Italia.
In January this year, Proximus in Belgium announced that it was cutting 6% of its workforce as it accelerated the “digitalisation” of its business, equating to around 750 jobs axed.
Vodafone had also reportedly already started cutting jobs in Spain at this time too, and in the same month, Verizon Media Group let go 800 staff, as they say in the US.
January was certainly a painful month on the jobs front, as Huawei’s under-siege CEO Ren Zhengfei warned of cuts in a company-wide email, if there was a big reduction in sales of its market -leading 5G equipment. It was leading before the US started to organise a boycott of it among western countries over the alleged – and unproven – Chinese state-spying threat from using it.
“In the coming years, the overall situation will probably not be as bright as imagined, we have to prepare for times of hardship,” Ren wrote. “We also need to give up some mediocre employees and lower labour expenses.”
There was seemingly “good news” at the end of February though, when it was reported that the Italian government had reached a deal with unions at Telecom Italia to push through 4,300 job cuts, well below initial fears.
As a whole, it may be the case that some operators are looking to reduce fixed costs by reverting back to the trick of putting more staff on flexible contracts. And/or simply making them redundant and rehiring them on bigger wages when they’re needed, to help manage dips and jumps in business in response to market conditions and technology changes.
I imagine it’s pretty hard to find good 5G and fibre-to-the-home deployment engineers at the moment though, and operators will also have to take into account that many of the ones that are still around may be near retirement age. So maybe the hiring of apprentices might have to be stepped up and money for HR and training staff to support them might have to be set aside – putting up costs again.
When will it all end? It never does, it’s the circular world of telecoms.
The author is freelance telecoms writer, Antony Savvas.
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