Why are Caribbean telecoms companies laying off so much staff?

Over the past year, telecoms companies across the Caribbean have been laying off employees and more are to come. This post examines this current employment trend.

Recruitment Person For Work by pakorn (FreeDigitalPhotos.net)Across the Caribbean and over the past several months, telecoms companies have been undergoing various forms of organisational change, which frequently, has resulted in the streamlining staff. For example, LIME has outsourced its external installation and maintenance services to Ericsson, and between Jamaica and Barbados, it has severed more than 500 employees. In the British Virgin Islands, both LIME and CCT Global Communications relieved approximately 18 employees as part of their reorganisation efforts, whilst in Dominica, Trinidad and Tobago, and Turks and Caicos Islands, lay-offs are reportedly imminent. However, although jobs are being lost, for the most part they are being re-created in third party firms, such as Ericsson, which the telecoms companies are contracting to perform certain activities on their behalf.

Consumer demand, efficiency, profits

As unpalatable as job loss is, those in the telecoms industry across the region is currently experiencing, is being driven primarily, by the push for telecoms companies to increase profits and improve their competitiveness. As was noted in our post, Reviving a struggling brand: 7 lessons from LIME, and in its annual results for 2012/2013, Cable and Wireless Communications (CWC), LIME’s parent company, set the target of reducing its operating expenses in the Caribbean by USD 100 million in order to improve the region’s EBITDA (earnings before interest, taxes, depreciation, and amortization) margin. Over the past few years, including the financial year ended March 2013, CWC’s revenues and EBITDA in the Caribbean have been falling steadily. To reverse that trend, process and operations optimisation that should result in considerable cost savings, will be critical.

Second, we must also be cognisant of the impact of competition (and regulation that is mimicking competition), and the continuous calls by consumers and policymakers alike for lower prices, on the reorganisation that has been occurring in the telecoms companies. When there is competition a market, the anticipated outcomes include greater choice of providers, a wider selection of services, and lower prices due to efficiencies that the players implement. Realising these “efficiencies” are what has been driving the reorganisation, downsizing and the streamlining of operations that are being experienced, but they are a natural consequence of efforts to drive prices down and remain competitive.

Costs and Prices vs Efficiencies and Profits (ICT Pulse)

Is outsourcing really a bad word?

Without a doubt, there has been a stigma attached to the term ‘outsourcing’, especially when referring to the work done by call centres, but it is an activity in which all businesses engage. Although we might not think of it as such, whenever a business contracts a third party to provide a service – such as maintaining your firm’s air-conditioning units, or preparing its financial reports and tax returns – these are all outsourcing activities.

The reason why outsourcing is essential to virtually all businesses is the fact that it is not cost effective for them to possess all the expertise and resources they might need in-house. Further, within the context of maximising efficiency and profits, current corporate best practice is encouraging organisations to focus on their core business, and to the extent permissible, secure external support for non-core activities and services, which is also fuelling the take up cloud services.

It is also worth noting that invariably, dedicated third party contractors can provide their services more cost-effectively than organisations that keep the same services in-house. Additionally, third party contractors or service provider firms are creating job opportunities, as they must be resourced and possess the expertise to competently fulfil the work contracts. For example, and as was noted earlier in the case of LIME Jamaica, for the technical personnel laid off, they could be absorbed by Ericsson (Source: The Gleaner). Hence firms outsourcing parts of their operations – customer care, finance and accounting, HR and payroll, IT – are likely to continue and even increase into the future.

The wider corporate change

Although the world is trending towards increased outsourcing, it appears that our societies have not yet adjusted to that paradigm, evidenced by the strikes and unrest that frequently occur when reorganisation plans are announced. However, experts suggest that in this day and age, persons will change jobs five to seven times in their lifetime, whilst Forbes anticipates that for Millennials (persons born between 1977 and 1997), they could have between 15 and 20 jobs over the course of their working lives.

For us in the Caribbean, and even further afield, it does mean that, first, the job security of working with the same organisation for your entire career, or just making one or two changes, will be rare, and perhaps even looked at with suspicion. Organisations want to be more agile and responsive to their corporate imperatives, and will exercise the right to downsize and reorganise to achieve those objectives. Second, and perhaps more importantly, people are becoming more proactive and less risk averse: they are charting their own course and pursuing new opportunities to advance themselves and their careers. We may therefore need to ask ourselves, “how prepared are we should our organisations decide to downsize, or to leave your current job for a new opportunity?”

In summary, no job is ever assured. Persons remain in the employ of another based on their mutual and continued agreement that the contract be upheld. However, when one party no longer wishes for that arrangement to continue, there is very little the other can do to maintain the status quo. For employees, in particular, it is therefore important to not be complacent regarding their careers. Most progressive organisations will be continually assessing their performance and deciding how best to maximise their returns, and you may be a casualty of the changes implemented.


Image credits:  pakorn (FreeDigitalPhotos.net); ICT Pulse


1 Comment

  • Well the article started discussing the telecoms industry and its economic turns then ended up relating to job instability as a way of life in general that we all need to accept.. We can safely say the sweeping innovations and advances in the telecom industry is eating at the profits of only the telecoms who remain with the same business model and revenue streams and do not venture into new visions. The Caribbean voice model is dying, the mobile voice model is dead too we’re waiting for someone new to give life to a new model and finally bury the old 2G -2.5G model of the last 12 years. Lime and Digicel, to a great extent, find themselves in a Price Cap Regime of stagnant price ranges where their only hope of growth prosperity is to cut costs and seek efficiency gains. But the time for that is not now. What the region needs is more investment in new business models to bring IP voice calling applications at much lower prices while trying to boast the business model with dramatic and daring services (which they will have to discover themselves, this is no consultancy paper here). However what I will nevertheless advise freely is that they should press for a rate of return regulatory model where they, at least, share the risk of new investment with governments, through a guaranteed rate of return over any extensive investment they make ( a win win situation) Regional Governments need to push the broadband development along for the sake of hastening in the information society services to serve the information society purposes, much of which are “social” in their nature.. The externalities for the information society make it worthwhile to employ development using rate of return as it was in the telephony business. When the information service have developed then reversion to price cap for tighter efficiency will become more practical and relevant.. As to job stability. i still believe jobs disappear because companies do not adapt to their emerging environment fast enough to remain viable. It’s the time of the chameleon .change to suit your landscape and you remain thriving, don’t and you become the dinosaur. Some jobs are necessary regardless of the landscape but they are in fewer industries than before hence the razzle dazzle of job instability but if you choose an area of expertise, weigh it against its utility and long term necessity in the scheme of things you can find many job areas that are stable. ask politicians and regional institutional leaders and the core members of Caribbean diplomacy…

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