Telkom-owned IT services company BCX has initiated a section 189 process under the Labour Relations Act that will see further retrenchments at the company.
The implementation of a new business model will entail structural changes to the business, BCX said in a statement on Thursday afternoon. BCX last went through a major retrenchment programme in late 2018.
“Due to the implementation of the new operating model as a result of changing market conditions, structural changes were inevitable. BCX served the section 189 notice to unions and the CCMA in accordance with the Labour Relations Act, this morning,” it said.
CEO Jonas Bogoshi said in the statement that it is “not an easy decision for any management team to make and is never taken as a first-line decision. There were various measures implemented to try and mitigate this,” he said.
Despite cost-cutting measures, a reduction in discretionary spend and “measures to increase business efficiencies” by “reducing business complexity”, the staff cuts are still necessary, he added.
“These measures could not insulate us from the rapidly changing ICT landscape, changes in customer demand and the devastating impact of Covid-19.”
BCX informed employees of the decision at a meeting on Thursday. “Our main priority is to support our employees over the next few months as we go through this process together,” Bogoshi said. Responding to questions from TechCentral, BCX said about 284 employees will be affected by the section 189 process. This represents 5.8% of the company’s 4 905 permanent employees.
“Although BCX had considered its strategic approach earlier on in the year, Covid-19 created immense financial pressure on the verticals important to its business forcing it to review its position. Covid-19 has had disastrous consequences for our economy, and its impact to our clients has been substantial,” Bogoshi said.
He said that customer expectations were “rapidly changing prior to Covid-19”. However, the financial constraints experienced as a result of the lockdown became evident.
“BCX had identified clients’ inability to meet financial responsibilities, received increased requests for payment options, identified a reduction in clients’ IT spend and a reprioritising of business requirements as some of the challenges. This created further pressure on BCX margins and on our ability to generate revenue.” — © 2020 NewsCentral Media