Wednesday, 26 August 2009

Fujitsu announces major UK redundancy programme

(By Richard Holway 11.00am Wednesday 26th Aug 09) Fujitsu’s UK IT services operation has just announced a proposed 1200 redundancy programme – equivalent to just under 10% of its UK workforce. This will not be an 'across the board' cut. Some areas will undoubtedly be harder hit than others. This comes on top of an existing pay freeze, pension curtailment (see our 17th May 09 post – Fujitsu closes its final salary pension scheme), contractor and temporary staff reductions etc

I talked earlier today with Roger Gilbert, Fujitsu’s UK CEO who took on the role on 1st Apr as part of Richard Christou’s major reorganisation (see our 31st Mar 09 post – Fujitsu’s new Global Business Group). Since then Gilbert has been undertaking a review of the UK business in the light of the integration of FSC and a pretty disappointing order book going into the new year.

Gilbert is now forecasting a 7% decline in Fujitsu’s UK revenues. Fujitsu claimed UK revenues of c£2b in their last FY to 31st March 09 of which £1640m was what we count as SITS (the rest is hardware and other non-SITS) Subscribers can read more in our recent CompanyViews report. Gilbert reckons we are safe to apply the 7% decline to both figures.

Fujitsu has found that the downturn has affected both its public and private sector business and order book. It’s not only a shortage of new business and projects but also the ‘More for Less’ syndrome when existing contracts come up for renewal. I asked Gilbert whether offshore had played an additional role in these redundancies and the answer was ‘inevitably we will do more offshoring’. Indeed you just can’t be competitive today without it. Gilbert did point out the significant ‘nearshore’ resources Fujitsu has in Northern Ireland.

I was also concerned about the effects on Fujitsu’s graduate recruitment programme. They took on c100 this year. Gilbert was ‘very reluctant to apply a complete ban on future graduate recruitment’ as it was such an important part of Fujitsu’s ethos. Hear Hear. But, I just cannot see it proceeding at previous levels against this backdrop.

For all those readers who have doubted our forecasts of continued reduction in UK SITS in 2009, remember that Fujitsu is/was the 5th largest supplier of SITS to the UK market. A 7% reduction in revenues from such a significant player would need huge increases from a large number of smaller players just to compensate. And I have no doubt that Fujitsu will not be alone amongst our Top Ranked UK SITS players in reporting revenue reductions this year.

Note - This post was made just after our 11.00am cut off point for the Wednesday email. Can we remind readers that if they want to read our comments on 'breaking news' they can refer to the website throughout the day or sign up for our Twitter feed @techmarketview.

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