Telstra to axe 170 jobs

Telstra (ASX: TLS), Australia’s biggest telecommunications provider is planning to offshore 170 staff to India despite reporting $1.6 billion in profit for the half year ended 31 December 2012.

This is not unusual for Telstra which back in February announced it would send 400 jobs to Asia for superior customer service. However, this move was the result of a handful of restructures and mergers of operational divisions that seek to combine its business into just five groups.

The job cuts are expected to be spread out across the country from the company’s IT services business and the changes are likely to begin by October and take up to a year. Telstra has said it will help staff with the transitions but it has come as a shock to many.

The boss of Telstra’s National Applications Services (NAS) business, David Burns, said the business was a growing area and that it has had “some success” in Asian markets. In the six months to 31 December 2012, the business grew by 10%.

The company is beginning to realise the potential in developing markets and seems to be shifting its focus away from domestic opportunities. Mr Burns said that the company will “need to expand our capability and support our growth in Asia”.

The recent restructure and direction of the company to focus on customer service, rather than growth opportunities here in Australia, suggest that more jobs cuts may be in the pipeline.

Telstra is not the first major Australian company that has, this year, offshored jobs to focus on cutting costs and expanding into Asia. Last month, leaked ANZ (ASX: ANZ) memos described the possibility that up to 600 staff could be cut and offshored in a bid to focus on overseas expansion.

Foolish takeaway

Many large organisations reach a point where they must cut costs, make acquisitions or expand overseas if they are to continue impressing shareholders. Telstra is a great Australian company and its stock could arguably fit into any portfolio, the only question is how much of it do you hold.

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Motley Fool contributor Owen Raszkiewicz owns shares in ANZ. 

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