Telecom Layoffs: The Changing Corporate Landscape

You can’t escape the headlines these days around layoffs. The list of companies announcing major layoffs over the last year is long, as evidenced by the extremely high unemployment levels in the United States. While businesses claim that these layoffs are necessary to stay competitive, how much is too much?

For instance, Verizon is planning to lay off 8,000 more workers by January 2010. At the same time, the company posted a $1.18 billion net income for 3rd quarter 2009, according to the Communications Workers of America (CWA) union. So, does a profitable company really need to lay off workers and create a further drag on the U.S. economy?

Qwest is another company that announced a layoff of workers to be “more effective and more efficient.” In this case, despite the layoffs, sales and profits continued to decrease for the company, according to their 3rd quarter financial statements

My personal opinion is that while U.S. companies keep talking about reducing workforces to be more competitive, the companies that are becoming smaller and smaller seem to also be less and less competitive – leaving the door open to smaller competitors. In one example, Sezmi (a small company with about 100 employees) claims that they will destroy their competitors (cable and satellite companies) by being nimble and delivering innovative services.

Peter Bregman has a similar observation, one that he posted in his blog at the Harvard Business Publishing site. His research shows that several smaller companies are beating out their larger competitors. He adds that this is because there is a growing culture of mistrust with large companies from both the employee and customer perspective due to company decisions around their layoffs.

So, does laying off workers really help businesses as claimed by the business executives? In addition, many business leaders seem to talk about “thinking outside the box,” but are they really? A one-time layoff might be necessary to make a “market adjustment” but after that, it seems like the business leaders ought to have “right-sized.” Instead of continuing to cut the talent that has enabled them to grow their businesses for the last 10 to 20 years, maybe the executives should eliminate the squabbling and profit taking at executive levels and actually invest in their business to grow it – although that might be too radical of a mindset in this era of corporate greed.

Keith Bromley is a subject matter expert on unified communications, IP telephony, SIP, optical, wireless and wireline infrastructure. He has held various technical and marketing roles with various national and international telecommunications companies including NEC, Metro-Optix, Cisco Systems, DSC and Ericsson. He holds a bachelor’s degree in electrical engineering and has authored more than 15 industry whitepapers and made more than 20 public presentations covering topics on IP telephony drivers, SIP, unified communications, as well as discussions around ROI and TCO for IP telephony solutions.