Telecom NZ to outsource IT, offshore call centres?

Telecom New Zealand has announced a transformation program — which could see the telco outsource its IT capabilities and offshore its call centres — as it attempts to turn itself around after a tough couple of years.

Since 2006, shareholders have been on a bit of a "rough ride" according to an investor presentation shown at the company's Sydney management briefing today, after the telco share price fell steadily after the instigation of regulatory changes. The telco has also seen the sale of its Yellow Pages Group, a change of CEO and operational separation in recent years.

Technology — including investments in fibre-to-the-node and its W-CDMA mobile network — as well as costs resulting from the separation have made Telecom's projected capital expenditure 2008's rise to NZ$975 million. In 2009 this figure is expected to rise to NZ$1.1 billion.

However, 2009 will also see the end of the W-CDMA build, according to a spokesperson, and the separation-related costs coming down a little. The company is also looking to reduce capital expenditure on business-as-usual items such as IT systems, as well as network maintenance and growth. The company hopes to see total capital expenditure drop to NZ$750 million by 2013.

In order to reduce operational expenditure by NZ$300 million per annum, Telecom NZ is looking to introduce measures such as offshoring call centres and possibly outsourcing IT and network operations. It is also aiming to improve its supply chain and automate sales and service.

Trials of offshore call centres have been conducted over the last year in Manila, the spokesperson said. How much will be offshored is not set, the spokesperson said, with decisions being made as the results of the trials come in. "There won't be any offshoring if the customer service can't hold up," the spokesperson continued.

No provisions have been made for redundancies, the spokesperson said, saying that the staff number would fall by attrition as some of the big projects come to an end.

Savings will also come from migrating customers from PSTN to an IP-based call system, the spokesperson said. The old copper network which in some places has been under the ground for twenty years will then not have to be maintained, he said. By 2020 the company aims to have no more customers on PSTN lines.

Telecom NZ could not provide further details on its cost-cutting plans.