Outsourcing heavyweights Unisys and Computer Sciences Corporation (CSC) have both announced staff cuts in an effort to slow falling revenues in the services market.
In recent weeks CSC globally announced plans to shed about 4300 employees during fiscal 2007, beginning this month.
CSC Australia CEO Mike Shove said that locally, those cuts will in the "tens" following a minor restructure.
Shove said the restructure reflects the needs of Australian CSC customers; staff losses will be through "natural attrition rather than redundancies".
"Due to natural attrition, we may not replace some positions, but this does not mean there will be formal redundancies in 2006-2007. In fact, we may be able to reduce the workforce with minimal redundancies, given the relatively small size of the positions affected," he said.
"We continue to win new business in Australia, so our ongoing operations continue to be healthy and strong. Globally, the restructure allows us to realign our operations to maximize our operational effectiveness and business alignments."
Unisys is shedding more staff on the back of a strategic review announced in Q3 2005, to "arrest a profitability drain", making up to 150 Australian staff redundant over the next three years.
Globally, Unisys reported a net loss of $US28 million for Q1 2006 based on revenue of $1.39 billion. In Q3 2005 net loss was $US 54.3 million.
Steve Parker, managing director of Unisys Australia and New Zealand, said the redundancies allow the company to focus on core competency areas such as outsourcing, open source, Microsoft, financial services and the public sector.
Parker said as a result Unisys will make 150 Australians redundant over the next three years.
"In Q3 last year Unisys went through a strategic review to take a three-year approach to the profitability problem and the ramification is there will be redundancies through 2006," Parker said.
"ANZ is a sizeable entity in the world of Unisys. We have around 2500 staff and every redundancy is tough, but in terms of numbers it will be just a couple of hundred [redundancies]."
Hydrasight analyst John Brand said CSC and Unisys are shedding staff because enterprises are choosing tier-two outsourcing providers. Brand said current tier-one outsourcing relationships have yet to reap quantifiable benefits.
"It comes back to the old IT argument that business does not receive strategic advice in the tier-one bracket; there is much more activity in tier-two providers," Brand said.
"Years ago, the emphasis was on business transformation as a lot of those contracts were built on the operational efficiency aspects of the business; the expectations were not met in terms of dollar investments with consulting companies as they did not return quantifiable benefits.
"Now, businesses are faced with deciding how the hell to get greater levels of efficiency and we are seeing more outsourcing contracts blown apart.
The tier-two providers are getting access to what was previously a bundled contract."