JSE-listed IT services company Gijima has warned it’s going to have to cut jobs to reduce its payroll costs by between 8% and 12%.
As part of what it calls an “internal people optimisation strategy”, Gijima plans to “streamline” its operations and restructure its business.
A Gijima spokesman won’t put an exact figure on the exact number of staff that will be affected by the process. The company employs more than 3 000 people.
“The first phase of the implementation of the new business structure resulted in some role duplication and staff underutilisation, which the group is now correcting,” it says in a statement. “Unfortunately, this will include reducing human capital costs by between 8% and 12% depending on the business area.”
The process will be completed by mid-August, while the business restructuring will come into full effect on 1 July 2012. It says top talent will be retained across the business.
“We aim to improve our performance and allow the organisation to look for and create new opportunities in the ICT space,” says CEO Jonas Bogoshi. “We are realigning our service and business offerings to create greater efficiencies and allow the organisation to adapt appropriately to market conditions.”
Bogoshi blames changes to the industry landscape for the restructuring and job losses. “ICT spend globally is under pressure and commoditised offerings have become the most price sensitive,” he says. “At the same time, clients, particularly those in the financial sector, have come under pressure to be even more competitive following global acquisitions.”
Gijima recently lost a portion of its contract to supply services to banking group Absa. It says its focus will be on ensuring its cost structures are “relevant to its growth plans and market expectations, and are in line with turnover targets”.
Bogoshi concedes changes to the Absa contract had an impact on its decision to “optimise” but this is also “linked to some duplications as a result of our new operating model and our intent to invest in the future of Gijima”.
“Our aim is to enhance our business competitiveness, and that of our valued clients, and this optimisation strategy will enable us to do just that, without compromising our track record of quality service delivery,” Bogoshi says.
He says the strategy is part of Gijima’s “Vision 2025” plan, which it initiated in early 2011. “We are already seeing traction from the plan we have put in place,” said Bogoshi.
Gijima’s share price is down 25% year on year. — (c) 2012 NewsCentral Media
