Telstra, the Australian telecommunications giant, has announced plans to cut up to 2,800 jobs, which accounts for 9% of its workforce. This move is part of a major cost-cutting initiative aimed at streamlining operations and improving productivity. The company expects to save $350 million through these layoffs.
The restructuring will primarily focus on Telstra’s enterprise business, which provides network and digital solutions to corporate customers. Telstra CEO Vicki Brady emphasized the importance of these changes in order for the company to continue investing in infrastructure and operational processes. She highlighted the dynamic nature of the industry, with evolving competition, technological advancements, changing customer needs, and ongoing inflationary pressures.
To determine areas that needed improvement, Telstra conducted a thorough review of its enterprise business in February. One specific goal is to reduce the number of products related to network, applications, and services (NAS) by almost two-thirds. Additionally, the company plans to simplify its customer sales and service model and reduce costs in its Telstra Purple tech services business.
Brady assured that support would be provided to affected employees during this reorganization. Telstra aims to navigate these changes with care and transparency, involving discussions with teams and union representatives before implementing specific changes. While the majority of layoffs are expected to occur by the end of 2024, immediate consultations will take place with 377 employees in supporting roles.
In addition to the restructuring, Telstra intends to simplify its operating processes by relocating its Global Business Services function within other parts of the business. The company will also implement measures to reduce non-labor and indirect labor costs. These actions are projected to save $350 million by the end of the 2024-25 financial year. However, the reorganization itself is estimated to cost between $200 million and $250 million over the same period.
Despite the costs associated with the changes, Telstra remains committed to its T25 strategy, a comprehensive business plan aimed at achieving sustainable growth and a $500 million cost reduction. As part of this strategy, Telstra has been integrating artificial intelligence (AI) across half of its operations, with plans for full implementation in the near future. Brady expressed satisfaction with the progress made thus far and stated that Telstra is approximately 12 months away from completing the T25 strategy.
In conclusion, Telstra’s decision to cut jobs and restructure its enterprise business underscores the company’s commitment to adapt to a changing industry landscape and ensure future growth. While the layoffs are expected to generate significant cost savings, Telstra remains focused on implementing its T25 strategy, leveraging AI technology, and delivering on profit metrics. Throughout this process, the company aims to support affected employees and maintain transparency in its decision-making.
