World Cup stalls Telkom outsourcing

By Staff Writer for Neotel
Johannesburg, 24 Mar 2009

Telkom has decided to push back its capability management strategy until after the FIFA 2010 Soccer World Cup.

Despite an earlier memorandum of understanding between the incumbent and the trade unions to have the capability management project begin in April this year, unions seem to have bullied Telkom into changing its decision again.

According to a statement released by trade union Solidarity this morning, unions met with Telkom last week and a new agreement is on the table, which will see the process moved to after the 2010 event.

The project is essentially a strategy to outsource up to 90% of the fixed-line utility's operations, that would affect 19 000 employees and save the company an estimated R1.3 billion a year. The process has been followed by several international telecoms giants with good results.

However, unions are concerned about the security of members' jobs and have blocked the process since its inception mid last year. Telkom has planned to negotiate with potential outsourcers to hold onto affected staff members.

Pen to paper

Despite a situation in favour of the union, Solidarity has not yet signed the agreement, saying it needs to meet with Telkom management to discuss the extent of the agreement. “Reportedly, it was decided to put the process on hold due to concern about Telkom's service delivery for the Soccer World Cup in 2010,” says Solidarity spokesman Jaco Kleynhans.

According to the union statement, it is demanding to be given full details about the Telkom agreement. Solidarity wants to know how long the agreement is valid for; whether it will include voluntary severance and early retirement packages; and whether it only applies to South African staff.

While Telkom has refused to officially confirm or deny which companies are pitching for the outsourcing deal, sources have revealed that Ericsson, Nokia Siemens Networks, Alcatel-Lucent and Cisco Systems have shown interest in the network operational outsource process. Accenture, Unisys, TechMahindra, HP and Amdocs are said to be interested in information operations.

Sources also claim the outsourcing deal has been extended to seven years and could be worth an estimated R10 billion.

More trouble

Solidarity has also declared an internal dispute with the incumbent over its wage negotiations, which have reportedly been postponed. According to the union, the negotiations were supposed to begin yesterday and have now been moved to Friday.

“In January, Solidarity was already set to conduct wage negotiations, but in the interim employees' interests are still not being looked after and negotiations are put off time and again. Solidarity is now demanding that the recognition agreement with trade unions be respected,” says Kleynhans.

Telkom signed a three-year wage agreement with the unions, which needs to be renegotiated in April. Last year, Telkom's interpretation of the agreement came under heavy fire by the unions, which noted that Telkom's version undermined staff increases.

Telkom could not confirm whether the agreement is set in stone and did not comment at the time of publication. It is also unlikely that Telkom will make a statement without notifying shareholders first.