Jonas Bogoshi

JSE-listed Gijima will trim between 8% and 12% of its R1 billion-a-year staff bill through retrenchments as it faces declining revenue because of lost deals and increasing costs.

The group, which recently lost half an Absa deal and a police desktop contract, currently has 3 080 employees. It says it will trim its “human capital” costs, mostly through retrenchments, but refuses to provide numbers as it still needs to follow a consultative human resources process.

In a statement, Gijima CEO Jonas Bogoshi said changes in the global market, and pricing pressure, means the company has to reassess its business operating model and restructure it to make it relevant. “Our aim is to enhance our business competitiveness.”

Gijima’s statement says the ICT industry landscape has changed dramatically and ICT spend globally is under pressure. “At the same time, clients, particularly those in the financial sector, have come under pressure to be even more competitive following global acquisitions.” An e-mailed communication sent to staff, which is in ITWeb’s possession, reveals the staff cuts are linked to lost revenue and higher costs.

“We have to take into consideration revenue forecasts for the new financial year, the investment required in new service offerings aligned to Vision 2025, and the investment needed to secure the company’s sustainable future,” said the mail from the CEO’s desk.

The mail says Gijima needs to “optimise our resource capability and utilisation” to remain competitive, “particularly in light of the loss of the SAPS [South African Police Service] contract for desktop computers and Barclays’ decision to in-source more than half of our contract with Absa”.

Gijima lost 200 staff members after Absa took half of a R200 million-a-year desktop contract in-house in March and took over employee contracts. At the time, CFO Carlos Ferreira said the group was not in a retrenchment phase.

A Gijima spokesperson says the current retrenchment plans and the March staff move are two separate matters and should not be confused. However, the loss of the Absa deal, which was secured in 2006 and worth R960 million over five years, has hurt the company.

Gijima has also lost part of a R20 million-a-month desktop supply and maintenance deal with SAPS.

Top talent will be retained and the process will be completed by mid-August, while the business restructuring will come into full effect on 1 July.