CSC is sacrificing UK employees for HPE spin merger - MP
1,600 UK job cuts have been announced at CSC over recent months as it prepares to merge with HPE's services arm
IT services giant CSC has been accused by an MP of making staff redundant to "ensure the right financial targets are hit" ahead of its merger with Hewlett Packard Enterprises' (HPE) services division.
CSC is set to merge with HPE's enterprise arm and become DXC Technology, a $26bn (£21bn) company, later this year - but the deal has come under scrutiny after CSC announced plans to axe 1,100 of its 5,500 UK jobs in its latest redundancy round.
The cuts come on top of 499 redundancies announced last year.
Texas-headquartered CSC has its UK base in Chesterfield and the area's MP Toby Perkins has accused the service provider of slashing its UK workforce to get the best deal possible for investors when the spin merger is complete.
Debating the redundancies in the House of Commons, Perkins said: "Members of the House will be aware of the prime minister's suggestion that, although her government would work to defend free markets and to promote the UK as a place where industry and enterprise is encouraged and thrives, she would expect business and government to work closely together to root out the worst excesses of capitalism.
"In that context, what interest are the government taking in the motivations behind CSC's decisions? The driver seems to be entirely about ensuring that the right financial targets are hit to ensure a merger on the most favourable terms for CSC shareholders.
"Figures published for the US stock exchange show that 12 individual directors stand to make bonuses of $90m on successful completion of the merger. How can we be confident that directors who stand to accrue untold riches in the short term will take a long-term view about the best interests of the business, its employees and the customers who rely on it?"
Impact on public sector
A number of the MPs involved in the debate raised the concern that the workforce cut could affect CSC's ability to deliver its public sector contracts, with key deals in place with the likes of Network Rail, the Metropolitan Police and the NHS.
Margot James, under-secretary of state at the Department for Business, Energy and Industrial Strategy, said that while CSC has painted a "worrying picture" with the cuts, its contracts with the public sector are unaffected.
"CSC has undertaken numerous contracts with vital services such as, as we have heard, Royal Mail, the police, civil nuclear and the NHS, and it is indeed of concern to us all that the skills and the contractual obligations given by CSC are honoured," she said.
"Given the situation, I can well understand right honourable and honourable members' concerns about the future.
"The Cabinet Office has assumed responsibility in government for dealing with CSC on these matters, and is in regular contact with the company about the viability of the contracts it has assumed. It has been given every assurance that the business will be ongoing and unaffected."
Outsourcing
A number of concerns were also raised with regards to CSC's tendency to service UK contracts from its India operation, where 25 to 30 per cent of its staff are now based.
"Although the tale of CSC's recent past includes rounds of redundancies, lost contracts, service failures and missed profit targets, followed by further redundancies and the whole cycle repeating itself, one area of CSC's business has seemed to grow," Perkins said.
"Many government contracts paid for by UK tax money are now being serviced by huge offshoring operations in India.
"There is a question for us in the House about how much GDP the UK is losing by allowing the government to outsource work to an American company that then effectively lays off UK staff in order to provide services to the UK government from India."