Phoenix memo reveals more engineering cuts

A number of engineers are going through a consultation period ahead of a round of redundancies

Phoenix IT Services (PITS) is to make a number of redundancies within its engineering team as it looks to move towards a model based around technical couriers. Channel onlookers have claimed the move will reduce the company's skills base and impact customer service.

Recently filed accounts with Companies House revealed the support services player shed more than 100 technical staff in its last fiscal year. As predicted by ChannelWeb earlier this week, more cuts are in the offing, with a number of engineers placed on redundancy notice. Industry speculation suggests several hundred engineers could be affected, with up to 50 set to be ultimately axed.

An internal memo seen by ChannelWeb says: "Those people that may be affected have received notification of a period of consultation. Clearly this is very unsettling for that particular group of people but, during this period, the service delivery function will run as normal."

The memo outlines that call volumes for PITS' traditional break-fix business have declined over the past quarter.

"This trend is set to continue as IT platforms are refreshed within some of the larger accounts," it adds.

It goes on to reveal that PITS has trialled the use of lower-end technical couriers.

"It has been concluded that the volume of calls handled using this methodology can be increased," said the memo. "You will all be aware that the field-based services market is highly competitive and there is an ongoing requirement to ensure that the delivery model is as efficient as possible."

PITS manages an operational shared services unit that provides centralised services capability to fellow Phoenix IT Group companies Servo and ICM Business Continuity. This unit provides more than 15 per cent of PITS' sales.

The memo claims that the centralised team has provided service-level agreement performance of about 95 per cent. It adds that PITS managing director Steve Neville – who ChannelWeb revealed yesterday is to depart next year – has assured sister companies their customer service will not be affected.

Phoenix recently revealed that two large outsourcing contracts, worth a combined £12.5m a year, are to come to an end shortly. Some industry onlookers claimed other customers would not welcome the move towards technical couriers.

One source told ChannelWeb the quick-fix model could work in a retail environment, but was not viable for the business world.

Another source added: "We believe customers should know. We are a competitor of theirs and need to ensure people know that they are de-skilling."

Phoenix declined to comment.