With its Global Service division causing huge loses, BT has communicated to its shareholders that it will cut nearly 15,000 jobs this year in an effort to reduce its overall costs.
Incidentally, BT has also projected that its revenues are expected to fall by 5 percent in this year because of the ongoing global recession.
Explaining the situation in which BT finds itself today, its chief executive Ian Livingston, mentioned “Three out of four of BT's lines of business have performed well in spite of fierce competition and the global economic downturn. However this achievement has been overshadowed by the unacceptable performance of BT Global Services."
BT also has to worry about the huge shortfall in its group pension fund which now stands at a staggering £4bn as compared to the figured of £2.8bn for last year.
Though BT continues to earn substantial revenues in UK, however it’s Global Services which caters large organisations like Microsoft, NHS etc is reeling under huge losses and has been instrumental in driving the whole organisation into a financial mess.
Though the job cuts are unlikely to go down well with the worker unions and the retrenched employees, its efficacy in cutting loses can only be known in near future.
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BT has managed quite successfully to grow from being a telco monopoly into a major actor in the world of telecommunications. But its past responsibilities (the fact that it has to pay for pension schemes and work with the government to improve universal broadband coverage) that are likely to weigh heavily on its financial stability.
(The New York Times)