Global Communications Benchmarking

Global Communications Benchmarking

The global telecommunications industry is in a depression of unimaginable proportions. Everyone is consolidating and downsizing. Ericsson's tenure has been rocky from the beginning. The company set up shop in San Diego in 1999, when it took over the CDMA infrastructure division from Qualcomm . When Ericsson took over the infrastructure division, it planned to become one of the top three CDMA equipment manufacturers, but it faced fierce competition from industry leaders such as Lucent Technologies and Motorola, as well as Samsung, which recently got into the business. Ericsson moved its San Diego research and development operations to Montreal. The decision was purely a matter of economics, as Montreal is a cheaper place to do business. More than 500 jobs, many of them engineering positions, eliminated, cutting Ericsson's local work force by more than half. The layoffs are part of a companywide initiative aimed at reducing costs. Still, Ericsson plans to keep the division's strategic and business development operations in San Diego. The layoffs are a result of problems in the larger wireless market and Ericsson's inability to compete with Asian manufacturers.

Compared to Global Communication scenario, Ericsson was also facing fierce competition in telecom industry from its competitors who are in the business for a long time. Like Global Communication Ericsson also devise the strategy to outsource its business overseas as a measure to reduce costs. Ericsson relocated some of its employees to its operations in Montreal giving them opportunity to work on interesting assignments and international travel and some employees to be laid off as seen in Global Communication scenario also.

Ericsson provided the opportunity for some of the employees who want to move to other business locally and overseas. The company provided attractive packages to the laid off employees and provided the career counseling services helping them in their career development and getting new job. Ericsson strategy to move its research and development center to Montreal helped in cost saving for the company as the cost to continue business in Montreal was cheaper compared to San Diego. The company also achieved employee satisfaction in this difficult time by moving them to other businesses within the company with added incentives and providing career counseling and incentives to the laid off employees.

Another company that was in a similar situation is Office Depot.

Office Depot, Inc. was founded in 1986. It is one of the world's largest sellers of office products and an industry leader in every distribution channel, including stores, direct mail, contract delivery, online shopping and business-to-business electronic commerce.

In a fierce competition by Office Depot to dominate the market and capture more market shares, they opened many stores, oulets and call centers all over the country and employed more than 1000 new employees.

The Company acquired Allied Office Products, an independent dealer of office products and services. It also completed the acquisition of Papirius, a business-to-business supplier of office products and services in Eastern Europe. This made Office Depot the nation's second largest office supply retailer.

They were doing very well until late in 2004 when it seemed that they could not cope with the emerging internet market, and had to take a drastic step to be more profitable. Very much like the same situation Global Communications found itself. The Fortune 500 company, started demanding increased productivity from telephone account management workers and did not clearly establish performance goals. Office Depot then announced that it would begin outsourcing various employee functions to third parties and expanding its use of virtual call centers, a setup where employees work from their homes. Those practices have long been popular among large corporations that are looking for ways to cut costs and increase productivity. For Office Depot, the plan was expected to save the company about $15 million each year.

Office Depot consolidated or closed eight of its 10 call centers. About 900 workers were affected. Although some employees transferred to other positions within the company, its outside partners or took advantage of the work-at-home option.

The consolidation strategy is just one example of how Office Depot is constantly "rebalancing" divisions of its business to drive profitable growth for its shareholders, spokesman Brian Levine said.

This was a big blow for the employees who were laid off, but the spokesman for the Office depot said that some employees will qualify for severance packages or placement else where in the company.

Employees said they were never notified about Office Depot's long-range plans to eliminate traditional call centers. They only began to worry that the company was considering layoffs when workers from West Corp., a leading outsourcing company, came to the call center a couple of weeks prior to Ð''job-shadow' them.

Bonuses, which comprised a large chunk of account managers' monthly pay, hinged on meeting performance goals. But since employees were not given a clear understanding of new accounts, they kept missing performance objectives and their bonuses suffered.

That year, Office Depot experienced growth to company financials for the second quarter. Office Depot said year-over-year sales grew 4 percent, to $3.5 billion, sending profits up 18 percent, to $118 million.

Small and medium sized companies are increasingly following the trend that the big businesses started when they outsourced some technology operations, paying other companies to manage their computers, networks, software and other technologies.

Millennium Partners Sports Club Management LLC, a Boston Ð'-based manager of health clubs around the country, had enough money in its budget last year to add three information-technology workers. Instead, the 1000 employee company used the money to pay CenterBeam Inc. to manage its technology. Under the agreement, Millennium for the first time handed over the task of maintaining and monitoring its desktop and lap top computers, server computers, spam-filtering software and network to CenterBeam, a closely held San Jose, California, start-up.

Millennium pays $30,000 a month for CenterBeam to oversee its tech systems and act as its help desk. That's about the same cost as having three additional employees, Millennium says. But it also buys access to a broader range of tech experts through CenterBeam. And by handing over day-to-day Tech operations, Millennium's in-house tech employees have time to