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2015-02-27

offshoring

New Telstra CEO to continue push into Asia - but at what cost to jobs?

Telstra’s new CEO, Andrew Penn, is expected to continue in the directions established by David Thodey, in terms of both the internal transformation of Telstra and its expansion into regional markets.

Last year, Penn was given responsibility for Telstra’s Asian operations in addition to his role as Chief Financial Officer. Looking back, that move was clearly part of a plan to position Penn as leader of the next stage of Telstra’s drive into the region.

Under David Thodey, Telstra has expanded its presence as a managed network services provider to corporates in Asia Pacific. It has established data centres in Hong Kong and Singapore and boosted its capacity in Australia.

And in December it announced it would acquire Pacnet, which owns data centres throughout Asia, including China, and a 46,000 kilometre undersea cable network for $857 million.

The CWU has always supported, in principle, Telstra’s entry into new product markets and into new geographic regions. But in our view, Telstra needs to take its employees with it on this journey, not jettison them in favour of cheaper overseas alternatives.

Last year the restructuring of Telstra’s Global Enterprise and Services (GES) operations on a regional basis saw 463 technical jobs – 700 including contractors – offshored to Asia. This work could have been performed here.

So could the network management functions which are being progressively offshored from the Global Operations Centre. There is no logistical or technical justification for the transfer of these skilled jobs out of Australia.

It is time for Telstra to make a reassessment of the impacts of offshoring on its business. The CWU believes it would find that the inefficiencies it creates and the hollowing out of skills it produces outweigh the savings in labour costs it is meant to deliver.

Here is an opportunity for Andy Penn to take a new direction by committing to the retention and development of the skilled domestic workforce Telstra needs to protect its home market, to improve service levels and to ensure the critical mass needed for its further expansion.

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