Telkom has told the 500 labour brokers that supply it with contracted personnel that it plans to terminate its agreements with them by 31 March.
This is an attempt to control costs as labour brokers generally get a monthly fee based on the contractor's hourly rate. This cost information does not appear in the annual financial statements, a general practice in the industry, and helps to keep the official head count lower.
Telkom has decided to cut out the middleman and contract these staff members directly. This means specialist IT staff will probably be sourced directly from the original software solution providers (the companies that supply software to Telkom).
According to a Telkom statement, the move will increase efficiencies and protect Telkom and its suppliers' intellectual property, and create consistency in the speedy deployment of software.
Labour brokers are similar to employment agencies, but while agencies are paid a once-off placement fee, labour brokers are paid a monthly fee for the entire duration of a contractor's tenure at Telkom. In the case of some contractors, Telkom has been paying this fee over many years.
Telkom says labour broker firms have supplied the company with contractors with specific IT skills and often work across a wide spectrum of the group's software systems, from project management on key systems in development, to systems in production.
Business sense
The operator is also concerned that contractors and labour brokers enter into short-term agreements outside the scope of Telkom's influence. These agreements are not synchronised with Telkom's project plans and requirements.
The 12-month agreements of "employment" between the labour brokers and contractors are not always conducive to efficient Telkom operations, the group says.
An analyst says this issue is a big problem throughout the industry, as contractors often move from one job to another for reasons that include salary and job satisfaction. "Software programmers are notorious for getting bored with an assignment and then moving on," he says.
One independent labour broker, who wished to remain anonymous, says the move will hit the industry hard and will also shift a human resources management burden back to Telkom.
"When Telkom was cutting its costs, it decided to implement the current model. Now it wants to take control again, along with the software suppliers who will supply the contractors. The new move won't save much and will just shift the cost and the burden somewhere else," the broker says.
The key unions that deal with Telkom had not commented on the issue by the time of publication.
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