BT’s 12-month rollercoaster ride

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While many divisions of BT seemed to weather the storm of recession with relative ease, there was one department that stuck out like a sore thumb and saw the company descend to the biggest low in this rollercoaster year.

BT Global Services is responsible for delivering IT and communications services to a massive 10,000 companies across the world. It seemed this daunting task was too much, however. In November of last year, following earnings well below expectations the chief executive, François Barrault, resigned.

The problems with the division didn’t stop when the leader left. Two weeks later, BT announced job cuts of 10,000 due to the financial problems caused by Global Services. The cuts eventually rocketed to 15,000.

May saw BT announcing further financial results, but again Global Services was held mainly responsible for the £1.5 billion loss the company reported.

All those in the firing line got an extra kick in the teeth when it was revealed later that month that failed leader Barrault received a £1.6 million payoff for his part in the losses.

The most recent results from BT have shown slight improvements but even chief executive Ian Livingstone conceded that when it came to Global Services there was “still much to do,” as its figures continued to hold the company back.

So has Global services set up the company for a long term fall?

Mike Newlove, co-founder of Hudson & Yorke, said: “I believe BT needs strong management to succeed, and there is evidence this is already happening. However, BT Global Services has performed very poorly over the last year, predominantly down to a small number of very large and problematic outsource type contracts.”

“They have had to make write downs for these contracts and attempt to renegotiate them, and have clearly “bitten off more than they can chew," he added. "The company has failed to deliver, probably focussing too much on revenue growth and gaining market share rather than being commercially robust.”

He doesn’t believe that this will take the company down.

“The BT Group outside of Global Services seems to continue to perform well in this challenging economic environment,” added Newlove. “I think that its investment in the 21st Century Network programme will yield operational cost savings in the coming years.”

Other twists and turns

The first twist to talk about is the company’s successful move into teleprescence, allowing high standard video conferencing where you feel as if you are in the same meeting room.

Working with Cisco and providing either high end built in equipment for those with cash to splash or offering a half way house of hosting rooms for one time uses, it is clearly a successful piece of tech that could cut out the costs and carbon emissions of travelling for meetings.

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