Misco kicks off UK workforce consultation to help it return to profit

Reseller began consultation with UK staff yesterday as it looks to reduce wage bill to tune of up to £5m

Misco is aiming to shave £4m to £5m from its UK wage bill through a salesforce restructure, something its new CEO has described as a "necessary evil" that will help return it to profitability.

Alan Cantwell (pictured above, centre) confirmed to CRN that the reseller is preparing to trim its sales and marketing headcount across its three remaining UK offices in Wellingborough, Weybridge and Inverclyde.

A fourth UK office, in Watford, was closed last month shortly after Cantwell led a management buy-in of the loss-making firm, backed by private equity house Hilco.

Cantwell declined to confirm exactly how many staff might leave the business, saying he still didn't know, but revealed that the restructure is designed to save Misco between £4m and £5m annually.

It is one of a number of initiatives Misco is undergoing as it targets a return to profitability in 2018, he explained.

The cutbacks will mainly affect roles in sales and marketing, and will target under-performers in the business, Cantwell said.

"This is a necessary evil for the business," he said.

"It is what it is. Fundamentally we are getting rid of some people in the business. We worked on a modelling exercise for several months before we took over and it's not rocket science - the overheads are too high for the business on the revenue and margins it is making. This should have been done a long time ago, and what we are doing now is the right thing for the business as it protects the vast majority of the jobs.

"We don't want to do death by a thousand cuts. We wanted to come in and do an assessment of who's there, and who's performing and who's not performing, and wanted to - as best we can - undertake one transition to refocus the UK sales model. Most of these functions are in the sales and marketing functions."

The sales commission structure was also recently rejigged to better reward over-performance, Cantwell indicated.

Misco has about 300 sales staff spread across its three UK offices.

Its Weybridge office has a long-term lease costing about £1m a year, but houses only 25 to 30 staff, less than a fifth of its capacity.

Misco is trying to sub-let that office and move to smaller premises nearby, but Cantwell stressed that the two sales teams based in the Surrey town are among the better-performing teams, as are the two teams in Scotland. Most of the cuts will probably hit its head office in Wellingborough, where there are 160 to 170 sales and marketing staff, he said.

Some affected staff could be offered new roles created by Misco's decision to return some functions previously carried out in Budapest to the UK, including in customer services, he added.

The £4m to £5m Misco will save from the UK job cuts are equal to about 20 to 25 per cent of group operating losses last year, which Cantwell said stood at about £22m.

But he said the change in ownership has already yielded encouraging results, claiming that April was the best trading month at a group level for 36 months. The UK also had one of its best months for 36 months in April, and has already achieved 102 per cent of its target for May, according to Cantwell.

In the last 10 days, Misco's Swedish arm was one of four suppliers selected on a local government framework worth €50m (£43m) a year, and its Dutch arm won a €12m solutions deal with the police force, he added.

"I do think that clients, suppliers and staff are seeing the positives of this transaction," he said. "It has re-energised staff. What we kicked off yesterday is not pleasant, but the reality is that people know when they are performing well and key to the business, and those people would very much welcome the actions yesterday, or at least see them as long overdue."