IT services company BCX is set to retrench employees.
In an internal memo sent to staff, the Telkom-owned company says it is commencing the Section 189 process, which sets out a company's legal requirements for retrenchments.
In the memo, seen by ITWeb, Jonas Bogoshi, CEO of BCX, says: "Today, we have served the unions with Section 189 notice which invites the unions to attend the first CCMA [Commission for Conciliation, Mediation and Arbitration] facilitated consultation session meeting set for 21 November 2018."
According to Bogoshi, this communication comes after many discussions and various considerations of alternatives to the Section 189 notice process.
"The strategies we have in place to mitigate declining voice revenues will not substitute for the decline, as the replacement technologies and new revenue streams are at lower margins," he says in the memo.
"The changes within our organisation must also be considered against what is happening in our environment. South Africa is in a technical recession. We are expecting that current and potential clients will continue to withhold IT spend in this economic environment.
"We have established platforms for constructive engagement throughout this process and will keep you informed throughout the process. You will receive regular companywide e-mails as and when there is information to be communicated.
"Furthermore, a formal BCX communication will be sent after each consultation session, via e-mail, highlighting the outcomes and next steps."
BCX, formerly Business Connexion, has taken a different business approach since it was acquired by Telkom in 2015 in a R2.67 billion deal.
The acquisition saw co-founder Isaac Mophatlane leaving the company in 2017. He was replaced by Ian Russell, who was then group chief transition officer.
Bogoshi replaced Russell as CEO in June this year. Prior to his departure, Russell told ITWeb there would be no forced retrenchments at BCX, as the company moved to consolidate its multiple subsidiaries.
In August, Mike Buttner, who was appointed COO of BCX in April, called it quits after being in the position for only four months.
In its recent financial results, BCX's parent Telkom reported flat revenue and declining headline earnings, as BCX struggled in a year that saw lower ICT spend in both the private and public sectors.
BCX's performance was also negatively impacted by the weak economy and a decline in voice revenue from its connectivity business.
In a short statement sent to ITWeb this morning, Telkom says: "BCX has served the Section 189 notice on all registered unions that have union members at BCX. The serving of a Section 189 notice is an intention to consult and explore alternatives to avoid or minimise retrenchments.
"The process is facilitated by the CCMA and will start on 21 November, subject to CCMA availability."
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