|
Kurt Hellström, President and CEO of Ericsson said:
"Weak market conditions for our industry persisted in the second quarter. Many of our customers have delayed spending on network expansion and in some cases postponed contracted deliveries. We cannot predict how long this situation will prevail as we have yet to see signs of improvement.
"While we cannot control the market, we can control our costs. The programs targeted to reduce our costs are running at full speed. Among other measures, we have consolidated activities in 29 countries into 8 Market Units. During the quarter, our cost reduction actions have affected more than 10,000 employees and 5,800 consultants. During the second half of the year another 10,000 employees will be affected. These are tough but necessary actions to restore profitability."
CitiGroup Corporate Investment Bank also admitted it will be cutting contractor rates and positions soon.
Susan Tether from CitiGroup Corporate Financing Bank said, "We are axing our contracting workforce by 10 per cent and are asking the remaining contractors to take pay cuts of 10 per cent. We are also asking that they take an unpaid two-week holiday before the end of September."
Philip Virgo, a Strategic Advisor at the Institute for the Management of Information Systems commented on the latest cuts and the broader situation for contractors in the current downturn.
He said, "The post Y2K recession was predicted in the IMIS IT Skills Trends reports from 1995 onwards although the scale and duration are now likely to be worse than the most pessimistic of the predictions.
"As in the 1991-3 recession there is, however, an increasingly multi-speed market.
"Demand and the going rate for some skill sets (e.g. PC support) are falling while those for others (e.g. SAP implementation) are holding steady or rising.
"A side effect of IR35 has been to make it harder for those with skills no longer in demand to retrain and acquire the skills still in shortage and likely to be in crisis when the markets turn. In consequence the recovery will almost certainly be delayed by renewed skills shortages."
Related stories:
An Autumn of rates cuts for IT contractors?
Number of contractors going permanent is growing sharply
--
Richard Powell, Shout99
|
