Well, last week Monday, mobile company - Digicel, announced that it would be offering voluntary redundancy to 450 of its staff, that is 10% of its 4,500 workforce across the Caribbean and Latin America.
This represents 23 of the 31 countries that Digicel serves.
(Digicel is market share leader in the provisioning of mobile services in the Caribbean,with about seven (7) million subscribers,1.9 million of which are in Jamaica.)
The redundancy exercises are intended to enable Digicel to restructure to become more efficient. They are also cost-cutting measures to position Digicel for future growth.
According to article, "O'Brien's Digicel to cut workforce in the Caribbean by 10%":
Digicel said the move was simply a matter of good housekeeping and was not a reflection of a downturn in the business or its subscriber base.
“We are now at a natural stage of our evolution to reassess our organisation, structure, processes and to fully capture operational efficiencies,” said Colm Delves, Digicel Group’s chief executive.
“This is particularly relevant in the current challenging economic environment where all companies, including financially strong and fully-funded companies such as Digicel, need to ensure that they have a lean and efficient structure to strengthen their financial position and protect plans for continued growth.”
=========
Staff have been given a fortnight to respond to the offer.
The voluntary redundancy package is being offered first, to prevent Digicel from having to make mandatory redundancies.
The media got hold of some of the package details: 4 weeks' pay with a week's pay for every year that the employee has been with the company; extended health coverage,pro rata bonuses and accelerated payments for stock options.
No doubt LIME (660,000 Jamaican customers) and Claro (220,000 Jamaican customers) (Digicel's major competitors in the region), must be scratching their heads re Digicel's latest move and contemplating what their major competitor has up its sleeve...
For if the mobile market leader can make staff redundant...they may not have any other choice but to follow suit...
Or is Digicel just messing with their competitors' minds?
Operational efficiency is a major competive advantage, any which way you put it... and married with innovation and reduced operational costs, make a lethal competitive bomb.
This announcement is high on the heels of the 13-day old verbal feud between Digicel and LIME over LIME's claim that Digicel Jamaica was blocking mobile calls from LIME customers in the Caribbean Region.
...and LIME filing an injuction against Digicel in court,as a result.
It is also, more interestingly, on the heels of the announcement by Digicel, that as of January 1,2009, its customers would be paying US $0.02 more per minute to accept calls from LIME's landline customers. The previous rate was US $0.09 (JMD $7) per minute, compared to the new tariff of US $0.11 (JMD $8.50).
And LIME announcing that since Digicel was increasing these fees, they had no other choice but to increase their rates to Digicel customers, as well.
(The Office of Utilities Regulation (OUR), has promised to intervene in both situations.)
Could these redundancies be a chess move by Digicel to try to justify its price increases to the Jamaican public and to the Regulator?
Thus saying to the Regulator that if the current prices don't remain, they will have no other choice than to lay-off more than the planned 10% of staff, given the intense competitive environment and harsh economic environment in which it operates.
...Thus strangle-arming the Regulator into accepting these price increases?
Or are they attempts by Digicel to try to distract the public from the sting of Digicel's recent price increases?
Well, whatever they are, Digicel sure does have the ear of the media...which is always great for publicity...
Hmmh!
I wonder what Digicel's next chess-move will be?
(I would like to thank Robert Webbe for the use of his Flickr photo of a Digicel GSM SIM card,above.)
Gillian
4) Article,"LIME files injunction against DIGICEL as legal battle looms", RadioJamaica.com,January 7,2008
5) Article "Digicel,LIME at odds over rate hike", Caribseek Jamaica News, December 29,2008
Comments