JSE-listed IT services and solutions group Business Connexion (BCX) confirmed this morning that its rejuvenation process may lead to job losses.
The company did not explain whether the losses were imminent, or how many could expect to lose their positions. However, CEO Benjamin Mophatlane says: “While the transformation is primarily focused on extracting intrinsic efficiencies across the group, it may, in some instances, result in certain roles and positions becoming redundant.”
The company also revealed this morning that it may be looking into outsourcing certain operations. According to Mophatlane, any due diligence for outsourcing providers would include the transfer of staff from BCX to the outsourcing business.
“It would be naive to ignore the impact of the global economy on our company. A consequence of this, coupled with ensuring we are correctly structured to operate under unforeseen economic challenges, requires us to be agile in the way we operate. We do this with the utmost intent of ensuring our workforce remains the cornerstone of our decision-making process, inclusive of maintaining a great service delivery as required by our clients,” he adds.
Simplifying, consolidating
The company has been clawing its way back from the brink of ruin for a few years and its revitalisation programme, which started last year, seemed to have put it back on track. The programme expects to improve BCX's operating margin to 8% by 2011.
According to Mophatlane, the company is in the process of changing what was a complicated business model into a simpler form factor. He says the large number of business units and divisions that operated in silos led to “severe inefficiency and duplication”.
The new business model will be chopped down to four distinct components: client engagement, shared services, technology and services, and strategy and innovation. Mophatlane adds that, as part of the process, once unnecessary duplications are erased, there may be positions in the business that will be redundant.
BCX says its Commercial Services unit is currently the company's focus in centralising and consolidating. “This means we need to have a tough introspection on how we are operationally structured today and make for some informed changes going forward,” explains Mophatlane.
What will be outsourced
“As a subsequence of this, Business Connexion will be evaluating the benefits to be derived from outsourcing,” he adds. The company says there are three areas of focus that it feels are non-core to its business: travel, logistics and facilities management.
BCX will be approach various companies in the due diligence phase. “The key criteria that will be included in the tender process, is maintaining existing client service level agreements and cost-effective service,” states Mophatlane.
He says one of the most important criteria will be that outsourcers absorb staff where possible. The company hopes to conclude the process by the end of May.
Realignment hopes
While BCX has been through rough times, analysts feel the revitalisation programme will make the company stronger.
Frost & Sullivan industry analyst Lindsey Mc Donald says BCX is in a better position than most technology businesses to survive the economic downturn. “The results had a lot to do with the cost of the company's revitalisation programme. It is, however, a more streamlined business than it was. This will put it in a good position for the year ahead,” she explains.
The company paid a once-off cost for the revitalisation programme, which dragged down its profits, according to a recent trading statement.
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