Improved efficiencies, protection of Telkom and its suppliers' intellectual property, consistency in the speedy deployment of software solutions as well as cost-effectiveness are the main considerations behind Telkom's decision to review its model of contractor supply.
"In March last year, Telkom entered into a commercial agreement with various labour broker firms and this agreement expires on 31 March 2007," said Motlatsi Nzeku, Telkom's Chief Information Officer.
Labour broker firms have supplied Telkom with contractors of specific IT skills. "Typically, contractors work across a wide spectrum of our software systems starting from project management on key systems in development, to systems in production," explained Nzeku.
Labour brokers are business entities 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.
This fee is based on the contractor's hourly rates. In the case of some contractors, Telkom has been paying this fee over many years.
"It does not make business sense for Telkom to continue with this arrangement any longer, and is a major reason as to why the company is reviewing its IT contractor engagement model," explained Nzeku.
He added that prudent cost management is an on-going challenge of any business.
"Our current method of procuring short-term labour through third parties neither promotes effective cost management nor does it enable Telkom to improve speedy and consistent deployment of software solutions," stated Nzeku.
Of major concern was the fact that such 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. Typically the agreements of "employment" between the labour brokers and contractors are 12 months and the terms of "employment" are not always conducive for efficient Telkom operations.
Another concern hinged on the issue of intellectual property. Most of the short-term contractors hired through labour brokers work on software solutions that are used by Telkom under licence conditions and owned by the original software solution providers (OSSP). In a knowledge-driven economy, the protection of intellectual property is a key business challenge for all parties involved.
"In order to protect the intellectual property of both Telkom and our software suppliers, it is important that we take ownership of all knowledge relating to our information systems. In future, maintenance and software support will be conducted by Telkom in partnership with OSSP," added Nzeku.
"This was not an easy decision but the outcome of deep deliberation, widespread consultation and negotiations that go back a year," concluded Nzeku.
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Telkom SA Limited is Africa's largest integrated communications company. Telkom provides public switched communication services in South Africa and offers fixed-line voice and data services, branded as Telkom. Telkom participates in the South African mobile communications market through its 50% shareholding in Vodacom, the largest mobile communications network operator in South Africa based on total estimated customers. Telkom's infrastructure is composed of terrestrial, undersea and satellite communications and pathways, broadband circuits and connections that enable voice, data and video communication services.
Telkom has approximately 4.7 million telephone access lines in service as of March 2006. Telkom had consolidated operating revenue of R47.6 billion for the year ended 31 March 2006. Telkom's subsidiaries include Telkom Directory Services (Pty) Ltd which provides complete yellow and white pages directory services as well as electronic services, and Swiftnet (Pty) Ltd. Swifnet trades under the name of FastNet Wireless Service and provides synchronous wireless access on Telkom's X25 network, Saponet-P, to its customers.
Telkom strongly believes in corporate social investment and has a dedicated wing, the Telkom Foundation, which focuses in investing and developing previously disadvantaged South African communities. The foundation spend R50.2 million in the year ended 31 March 2006 on projects relating to ICT planning and infrastructure roll-out; education and training; and empowerment of women, children and people with disabilities.
Telkom has always viewed South Africa's effective transformation as imperative for its sustainable long-term growth. Empowerment and the transformation of the economy are central to Telkom's BEE strategy. During the year ended 31 March 2006, 67 % of Telkom's procurement spend was on BEE companies. In addition, Telkom trained 18 black SMMEs and a total of 1 181 suppliers at an estimated cost of R7.1 million.
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