Re-arranging the UK deck chairs on good ship CSC is the strategy the integrator has chosen after shelving plans to make further redundancies, according to numerous sources.
We are told by folk close to the matter that CSC was going to make more job cuts, with at least 100 expected, but no HR1 form is winding its way to the government or to unions.
“They [CSC] are not going to have redundancies, but there will be a re-org. Some people wanted redundancy and are pretty miffed,” said one contact. “They are reviewing the business and some may be expected to take on a slightly different role if it fits their skills.”
The integrator is understood to be implementing a new delivery model as one element: instead of having dedicated teams for clients the firm will create delivery hubs and use remote management for customers’ infrastructure.
“Standardisation should mean teams will deal with issues across multiple clients, and if CSC uses more automation and tools then arguably it can get things fixed quicker,” an insider told us.
That of course is the theory, and in this respect CSC is playing catch up with far bigger services rivals that implemented this model way back when.
A wider organisational revamp may not be a bad thing either: morale on the shop floor is low, we are told. One source described the current set-up as “laughably complex” and said it slows decision making.
“A three dimensional matrix is not right in a turnaround. The company needs simplification: delegate responsibility, empower people and let them get on. When the business is on a more even keel, then add complexity,” said a person close to CSC.
In fiscal Q1 ended August, CSC said it expected “modest commercial” revenue growth for this financial year, and CEO Mike Lawrie said he expected “our cost takeout to ramp up over the course of the year”.
But slashing overheads only works up to a point; companies can get caught in a trap when revenues stall, gross margins fall and they need to cut costs faster to meet margin expectations.
Ian Tonks, national officer for ICT at Unite, questioned the strategy of “neverending cost cutting”.
“CSC seems addicted to reorganisations being pushed by the US [management team],” he told us.
A CSC spokesman said:
“Just like any large organisation doing business in a fast changing market, we are always refining the way we operate and organise ourselves.”
The company last night reported further top line stagnation, down $107m year-on-year to $3.08bn in fiscal Q2 ended October, and despite cost cutting, net income dropped to $151m compared to $232m in the prior year. ®