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Deutsche Telekom begins major job cut at T-Systems division

Staff Writer |
Deutsche Telekom has secured an agreement with labor representatives which will enable it to eliminate thousands of jobs at its T-Systems IT division, the Bonn-based company announced on Monday.

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"We have reached an agreement on eliminating a total of 3,765 positions by 2020," Thomas Schneegans, head of the Deutsche Telekom workers' council, told the German newspaper Handelsblatt.

A further 1,200 positions were also at disposition if the performance of the division did not improve until that deadline.

Earlier, Abdel Al-Saleh, the newly-installed T-Systems head, unveiled plans to return T-Systems to profitability until 2020 by investing in cloud-computing solutions and culling up to 10,500 jobs to achieve around 600 million euros ($695 million) in annual savings.

The announcement was met with heavy resistance from labor representatives who warned that they would challenge the drastic re-structuring measures pursued by Al-Saleh.

"We will intensify the conflict after the summer break," Lothar Schroeder, trade union representative and Deutsche Telekom deputy board chairman, told reporters.

According to Handelsblatt, the compromise puts the total tally of potential job losses significantly lower at 5,600. The figure includes resignations which have already been filed by hundreds of T-Systems employees since the beginning of the labor dispute.

Increasingly tough sectoral competition has meant that T-Systems has repeatedly struggled to break even during past years. However, earnings figures presented by Deutsche Telekom for the latest second quarter (Q2) of 2018 showed that prospects at the ailing division had improved again with the volume of new orders rising by 42 percent.

Deutsche Telekom is Europe's largest telecomm company and employs more than 217,000 employees across the world. Prior to its privatization in 1995, the Bonn-based company was state-owned enterprise (SoE) which had been established as part of the German government's postal sector monopoly in 1947.

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