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Telstra to outsource 170 jobs to Indian firm Infosys

David Ramli and Paul Smith (via AFR) | July 10, 2013
Telstra has the most mature offshoring strategy among Australian organisations but could still improve cost benefits by looking to cheaper locations.

Telstra will outsource the roles of 170 full-time staff and 90 contractors from one of its fastest-growing business units to India, with Indian supplier ­Infosys understood to be picking up the work.

The redundancies from Telstra's network applications and services division announced on Tuesday are the latest in a series of staff cuts at the telecommunications giant. In May, it indicated plans to overhaul its15,000-strong internal operations divisions.

The NAS division, which generated $636 million in revenues in the half-year ending December 31, 2012, sells services such as cloud computing and video conferencing. It is Telstra's fastest-growing segment with plans to increase the business in Asia.

Speaking to journalists on Tuesday, David Burns, Telstra's head of NAS, said while his unit had been successful, the current business model was limited and the changes were needed for continued growth.

"Should the decision be made to proceed, we'd begin to move these services to India from October of this year and it would take a period of 6-12 months to occur," he said. "These roles are located in all of the major capital cities including Hobart and Canberra.

"[With the move,] I get the ability to respond to growth, I get the ability to meet customer demands internationally and domestically and I get the ability to do that in a responsive and competitive way."

Mr Burns said negotiations for the outsource service provider had not been completed, but a preferred tenderer had been selected. The Australian Financial Review, however, understands Infosys has won the contract.

The roles set to be made redundant involve back-office functions such as operations staff and resource managers rather than customer-facing roles.

A Communications, Electrical and Plumbing Union assistant secretary, Ken Hardisty, said the group would ramp up its program of public rallies to protest the latest move.

"We'll be hoping to get into the media and use more rallies and protests to put some pressure back on Telstra at a corporate level to show this is unacceptable to the Australian public," he said. "They can't keep sending jobs offshore, and we need the public's support, which we think we can get if we rally it together."

But analysts told the Financial Review that Telstra was likely to continue its drive to move back-office functions offshore in an effort to counter falling revenues in key divisions.

Managing director of niche outsourcing advisory firm Mindfields, Mohit Sharma, said Telstra had the most mature offshoring strategy among Australian organisations but could still improve cost benefits by looking to cheaper locations.

"These commoditised processes can be easily be offshored to China - also [with] at least 20 per cent lower pricing and more strict service levels," Mr Sharma said.


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