FRANKFURT, June 21 (Reuters) - T-Systems, the lossmaking IT services arm of Germany’s Deutsche Telekom, plans to cut 10,000 jobs as it seeks to return to profitability, new CEO Adel Al-Saleh was quoted as saying on Thursday.
Al Saleh, brought in this year to turn around T-Systems, told the Handelsblatt financial daily that 6,000 of the job reductions would be made in Germany over the course of the next three years.
It is the first time the American executive has named a figure for planned headcount reductions at T-Systems, which has a total staff of 37,000 and has for years been the problem child of Europe’s largest telecoms group.
“The reduction programme will be expensive because we want to make it as socially bearable as possible - but this investment will pay off,” Al-Saleh told the newspaper according to extracts of an interview to be published on Friday.
Al-Saleh has given himself up to two years to turn around the 7 billion euro ($8.1 billion) company, whose top line is shrinking and margins are under pressure. T-Systems’ traditional IT outsourcing business has struggled most.
He told Handelsblatt he was seeking savings of 600 million euros through 2021. “We will invest the cash that is saved in making T-Systems profitable again,” Al-Saleh said.
Trade union Verdi, which represents service industry workers in Germany, vowed to fight the job cuts.
“We will defend ourselves vehemently against plans that destroy the business viability of T-Systems and the livelihoods of thousands of employees,” Lothar Schroeder, Verdi’s representative on Deutsche Telekom’s supervisory board, told Handelsblatt.
T-Systems was not immediately available to confirm the accuracy of the Handelsblatt report. ($1 = 0.8613 euros) (Reporting by Douglas Busvine; Editing by Toby Chopra)