Layoffs at Vodafone, Spark

Revenue per employee
Vodafone NZ: $728,400*
Spark NZ: $654,100 **
2degrees: $441,000 *** 

* Using post-layoff staff target figure
** Full time and FTE staff as of June 30. Spark has not given a specific target for its latest round of layoffs
*** 2013 revenue. Spark and Vodafone figures are for FY2014

Vodafone NZ and Spark NZ are cutting staff.

Vodafone is cutting 200 to 250 permanent staff by March 2015 next year, head of external communications Craig Jones confirms.

The redundancies come on top of a recent cull of contracting staff.

Mr Jones says the job losses are the result of two factors: overlap from the TelstraClear takeover and "unprecedented levels of competition in both mobile and fixed line services in New Zealand" over the past 18 months.

Vodafone NZ recently reported its first annual loss since 2000.  It lost $27.9 million in the 12 months ended March 31, from a profit of $55.9 million a year earlier, on revenue that climbed 16 percent to $2.06 billion. The loss was put down to the rising cost of sales, and costs associated with the TelstraClear acquisition. Mr Jones says Vodafone has "invested significantly in removing systems and process duplication within the new organisation."

How many staff does Vodafone NZ have now. A rep offers, "I can’t give a number of current staff. However, after the acquisition of TelstraClear we had approximately 3275 staff. By 31 March 2015 we have forecast this number to be approximately 2828. Both numbers are made up of contractors and permanent staff. "

Mr Jones adds, "Vodafone continues to invest significantly in the New Zealand market and communities. Vodafone is progressing a $50 million South Island headquarters in the heart of Christchurch’s new Innovation Precinct. The purpose-built, four-level facility at Tuam Street will allow Vodafone to bring together its Christchurch staff – currently working across several temporary sites – into one central location, with significant capacity for future expansion and growth."

(The $50 million figure is a slight misnomer. As NBR's property reporter Chris Hutching pointed out, Vodafone leased space in a building valued at $50 million rather than investing that figure in Christchurch directly as some media implied).

Spark cuts
Spark is set to reduce numbers at its Connect division, which runs the company's back-office operations, and employs 1780 staff, mainly in Auckland with a few in Wellington. Spokesman Andrew Pirie says consultations have started, and "There will be some job losses as a result but too early to say how many." Rumours of up to 400 layoffs are well above the mark, he says. 

"The [Connect] functions  primarily involve staff who develop and build the IT systems on which our various customer services are run.  We are reorganising these functions to improve efficiency and speed up delivery of customer services," Spark GM for corporate relations Andrew Pirie says.

"This move reflects the ongoing need of all digital services providers to be as cost effective as possible in a rapidly changing and highly competitive marketplace, in which customers are continually expecting more services and value at lower prices."

In its latest annual report, Spark said it had 5172 full time employees as of June 30 this year, plus, 393 full-time-equivalent contractors.

Earlier this eary, around 1230 staff were cut in a major restructure. In last year's annual report, Spark said it had 6622 full time staff as of June 30, 2013.

Sparks's full-year profit to June 30 nearly doubled to $460 million from $238 million a year earlier, when it booked a series of charges as part of a radical overhaul of its business. Excluding the $137 million gain from the sale of AAPT and restructuring costs in 2013, earnings from continuing operations climbed 20 percent to $323 million. Revenue slipped 2.6 percent to $3.64 billion

2degrees steady
Relative newcomer 2degrees, which has always run a lean operation, has 780 staff, a spokeswoman tells NBR — the same number it reported last year.

"Our staff numbers are about the same as last year and while we are still growing as a business, we expect it will stay at around that number next year as well," spokeswoman Charlene White tells NBR.

2degrees is targetting more contract consumer and business customers, and says it will join Spark and Vodafone in the fixed line market within 12 months.

Last year, 2degrees made a net loss of $35.9 million, a 20% improvement on the $45.2 million lost in 2012.

Revenue rose 22% to $344 million.

A skills shortage, but not necessarily for their skills
Those departing Spark and Vodafone will enter a job market where there's an accute ICT (information and communications) skills shortage. However, industry observers caution there would be a mis-match in skills. The likes of Vend, Xero and Orion Health are looking for hundreds of staff, but it's software and web development skills that are at a premium.

Earlier, Candace Kinser - CEO of NZICT, an industry lobby group that includes the likes of Cisco, Endace, HP, IBM and Microsoft among its members - says many tech companies are "suffering now because they can't find staff."

Ms Kinser consulted with Spark executive Chris Quin on job placement as the company laid off staff earlier this year.

However, she cautioned that although there is an ICT skills shortage, many jobs are with startups, or others that won't pay the kind of corporate salary dished out at the big telocs (last year, Spark had more than 3000 staff earning more than $100,000, according to its annual report).

"They're not all going to be $100,000 developer roles. I think that's where the issue is. It'll be across the spectrum; middle-management, back-office, you name it," Ms Kinser said.

ckeall@nbr.co.nz

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