Telstra hires cheap foreign workers
Telstra hires cheap foreign workers
Date: Tuesday, April 22, 2003 9:34 AM
H-1B and JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
Finance Sector Union national president Tony Beck said several major
companies, including Telstra, were betraying Australians and exploiting
workers in third world countries by outsourcing their work.
"It's a scandal," he said.
http://www.heraldsun.news.com.au/common/story_page/0,5478,6318494%255E662,00.html
Telstra hires cheap foreign workers
By TANYA GILES and MATHEW CHARLES
22apr03
TELSTRA is using Indian computer workers on sweatshop wages to replace
higher paid Australians.
The telecommunications giant which remains 50.1 per cent owned by
Australian taxpayers has almost 100 Indian programmers and analysts.
The foreign recruits are earning as little as $12,000 a year,
undercutting Australian IT specialists who can earn about $60,000 for
doing the same job.
An internal Telstra memo seen by the Herald Sun reveals the
controversial scheme managed by two of India's biggest companies will
save the national carrier between $15 million and $18 million a year.
Sources said Telstra hired the workers including a number at its
Exhibition St head office through Indian IT outsourcing giants Infosys
and Satyam.
A source has contacted one of the Indian workers, who confirmed they
were earning $1000 a month.
The telco giant, which is on track to report a $3.66 billion profit
this year, has signed the cut-rate workers on contracts for between six
months and two years.
Unions yesterday denounced the scheme as exploitative and immoral,
calling for Telstra and the Federal Government to come clean on the
deal.
CPSU national secretary Adrian O'Connell, representing
telecommunication workers, said Telstra's move had shocking
ramifications.
"It's a scandal," he said. "If Telstra, Australia's largest company,
can do this, will other companies follow?"
Telstra spokesman Stephen Morrison denied the company was trying to cut
local jobs.
"There is no intention to replace Telstra IT staff with Indian IT
suppliers," he said.
"Like many companies around the world we have previously engaged Indian
IT firms to do our IT work.
"In terms of the exact resource arrangements that these companies have
implemented, that's something best known to them.
"We are broadly aware they use both Indian and local staff."
Mr Morrison outlined three criteria Telstra needed to satisfy before
entering into a contract like the ones with Infosys and Satyam. They
are expertise, cycle time (how quickly the work is done) and cost, he
said.
"There is no industry more global than IT," he said. "Telstra, like
other Australian companies and government departments, works with
providers from all around the world."
Vice-president at IT global research firm Gartner Australasia, Bob
Hayward, said there were doubts about how well the Indian workers
understood Australian business processes. "There are a lot of hidden
costs associated with using offshore service companies," he said.
"While they may be able to speak English, they may not have a clear
understanding of what you are really trying to say."
"There is scope for misunderstanding despite speaking the same
language."
The move is believed to be part of Telstra boss Dr Ziggy Switkowski's
reorganisation of the business last November.
About 4700 Australian workers were sacked by Telstra in a cost-cutting
exercise last year ahead of its worst half-year profit since partially
privatising in 1997.
In a memorandum dated last month and seen by the Herald Sun, Telstra
chief information officer Jeff Smith said the company would benefit
from a considerable reduction in wage costs by employing workers from
India.
"The costs are a considerable reduction to the tune of 27,000 rupees
per annum per IT programmer/analyst," Mr Smith stated in the memo.
He said in the memo that an IT "transformation" of Telstra would be
implemented by Indian IT giants Infosys and Satyam Computer Services,
both of which have operations in Australia.
Last year, Mr Smith headed a 15-person senior management team to India
to explore the possibility of sending IT jobs to the subcontinent as
well as call-centre and other back-office jobs.
Dr Switkowski was last year unapologetic for sacking workers, saying
until a recovery in the telecommunications market occurred, Telstra
would continue to cut spending.
He has consistently refused to rule out further job cuts and unions
believe another 1000 jobs could be on the line, but it could top 4000.
Telstra insiders said they were not only morally outraged by the
company's latest cost-cutting move, but also concerned about the
long-term financial ramifications for the company.
"I'm worried about the mums and dads out there. Telstra shares are
already down to $4, what will happen to their investments, their
superannuation, if this fails," a source said.
Telstra's shareholders include about two million mum and dad investors
as well as banks and other large companies.
Those who invested in Telstra's second share sale, the so-called T2
float, for $7.40 a share have lost more than 44 per cent on their
investment.
A 1000-strong share parcel, worth $7400 when T2 listed at $7.40, is now
worth just $4120.
Mr O'Connell said the Federal Government should also be held
responsible after the Department of Foreign Affairs and Trade released
an economic report in 2001 that suggested Australian companies could
cut costs by outsourcing some of their IT operations to India.
Mr O'Connell said big businesses like Telstra had to think of the
long-term consequences for the community when making short-term
decisions to save money.
Finance Sector Union national president Tony Beck said several major
companies, including Telstra, were betraying Australians and exploiting
workers in third world countries by outsourcing their work.
"It's a scandal," he said.
"These companies are thought to be good corporate citizens . . yet here
they are, purely for expedient reasons, outsourcing work to India.It's
appalling."
In a further blow to Telstra, about 50 former workers are launching a
class action over losing entitlements and long-service leave after
being transferred to multi-national computer services company EDS.
About 110 of the sub-contracted workers lost their jobs last week.
Another 65 are expected to leave by July.
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