Sol likes offshore options (http://theaustralian.com.au report)

Sol likes offshore options Michael Sainsbury October 26, 2005 TELSTRA is set to cut more jobs by shifting large chunks of its operations to third-party service providers as part of chief executive Sol Trujillo's company-wide restructure. The move is designed to create a "new" and "leaner" Telstra as outlined by Mr Trujillo to shareholders at the company's annual general meeting in Sydney yesterday. Financial markets are already factoring in up to 16,000 job cuts at Telstra when Mr Trujillo unveils his review next month. The Australian has learned that all technology proposals being submitted to the company's new Program Office - which is in charge of implementing Mr Trujillo's new strategy - must contain an outsource "contingency". Telstra insiders said every business case must state where an outsource quote has been sought, and the result. In addition, reasons why outsourcing is not chosen must be strong. "Clearly we will be leaner in terms of how we operate," Mr Trujillo said. "We have various combinations of people, sometimes fully employed on the Telstra payroll, as well as many contractors. "As we move forward, we will be looking at both sources of work, in terms of finding ways that we can use the cost structures of our business." Global IT services giant Accenture, which is helping Mr Trujillo with his global review, is lobbying hard to grab outsourcing work from Telstra. Mr Trujillo and his operations chief Greg Winn are also considering sending more information technology work to India. The company first sent jobs offshore last year. Mr Trujillo has also instituted a new cost-cutting regime. Business units are being asked to submit fresh cost targets with quantum savings which are being review by consultants Bain and Company. New processes for the allocation of all capital expenditure across the company were also being deployed, insiders said. Mr Trujillo yesterday also gave a first taste of the widespread overhaul of Telstra he plans to unveil next month. He said the five major themes would be market-based segmentation, a "one factory" model, increased innovation, a leaner cost structure and an improvement in decision-making times. But he warned that the decline of Telstra's fixed-line business continued to accelerate: "The biggest issue facing us today is that we have a very leaky bucket associated with our fixed-line revenues." Revenue from Telstra's fixed-line business declined 1.9 per cent in the first half of 2004-05 and then by 5 per cent in the second half. "And this decline is accelerating," he said. Telstra is also expected to announce as early as today that its New Zealand subsidiary Telstra Clear will not invest in a 3G mobile network. It had plans to spend $300 million on a network in Auckland. Sol likes offshore options - 26 October 2005 - TELSTRA is set to cut more jobs by shifting large chunks of its operations to third-party service providers as part of chief executive Sol Trujillo's company-wide restructure. The move is designed to create a "new" and "leaner" Telstra as outlined by Mr Trujillo to shareholders at the company's annual general meeting in Sydney yesterday. Financial markets are already factoring in up to 16,000 job cuts at Telstra when Mr Trujillo unveils his review next month. The Australian has learned that all technology proposals being submitted to the company's new Program Office - which is in charge of implementing Mr Trujillo's new strategy - must contain an outsource "contingency". Telstra insiders said every business case must state where an outsource quote has been sought, and the result. In addition, reasons why outsourcing is not chosen must be strong. "Clearly we will be leaner in terms of how we operate," Mr Trujillo said. "We have various combinations of people, sometimes fully employed on the Telstra payroll, as well as many contractors. "As we move forward, we will be looking at both sources of work, in terms of finding ways that we can use the cost structures of our business." Global IT services giant Accenture, which is helping Mr Trujillo with his global review, is lobbying hard to grab outsourcing work from Telstra. Mr Trujillo and his operations chief Greg Winn are also considering sending more information technology work to India. The company first sent jobs offshore last year. Mr Trujillo has also instituted a new cost-cutting regime. Business units are being asked to submit fresh cost targets with quantum savings which are being review by consultants Bain and Company. New processes for the allocation of all capital expenditure across the company were also being deployed, insiders said. Mr Trujillo yesterday also gave a first taste of the widespread overhaul of Telstra he plans to unveil next month. He said the five major themes would be market-based segmentation, a "one factory" model, increased innovation, a leaner cost structure and an improvement in decision-making times.

But he warned that the decline of Telstra's fixed-line business continued to accelerate: "The biggest issue facing us today is that we have a very leaky bucket associated with our fixed-line revenues." Revenue from Telstra's fixed-line business declined 1.9 per cent in the first half of 2004-05 and then by 5 per cent in the second half. "And this decline is accelerating," he said. Telstra is also expected to announce as early as today that its New Zealand subsidiary Telstra Clear will not invest in a 3G mobile network. It had plans to spend $300 million on a network in Auckland.