Discussions have taken place led by the DGS(T) on the need for more robust action to find suitable alternative employment, given the large volumes of predicted redeployees to be generated in this financial year.

Attached for the information of Branches is a copy of the letter requesting discussions and a written reply to how BT Group see matters will be circulated to Branches in due course.

In the interim, the following is a report of the initial discussions and the courses of action, some of which require further work to be carried out by Lines of Business management. 

Following the poor financial results for Q1 the Company has turned its specific attention to the one cost that it has a fair control over and that is its total labour costs. 

For the financial year just ended, the direct labour used by BT was in the order of 110,000 FTE globally and its third party resourcing in the order of 45,000.  This third party resourcing is a mixture of agency/contractors (a mixture of third party supply and direct contract hires of 14,000).  The usual third party supply of service for access network products and services which also contains civils activity (5,000) and off-shoring (26,000) is in the main the supply of systems and software design and support. 

BT at the Group level will be undertaking the following actions: 

• Recruitment freeze.  No external recruitment will be approved unless signed off at BT Group HR Director level.  Operational management will be expected to work harder on finding suitable talent within BT.
• Centralise the CTCs/STCs to improve management support for people in these units.
• Incentivise Lines of Business.  To date there is only cost support for the differential between the cost of the current grade and the actual grade where there are large groups or unit moves.  This will now be extended to individual moves for 18 months and the gaining Line of Business will receive an additional £10,000 incentive payment.
• Agency/Contractor Deployment.  Whist there is an internal system which captures the numbers, owning managers and a job title of agency/contractors within BT, there is little else by way of further explanation as to their activity.  There is no grade equivalent and has been a barrier for the CWU in the past when seeking to get conversions and displacement opportunities.  All Lines of Business have been tasked with providing precise detail on the role undertaken.  It is the intended objective of removing the veil that is often drawn across such functions when the Union has sought displacement opportunities.  BT Group has been advised that they can expect to have robust discussions in the various Lines of Business over the content of this information. It has been indicated that the emphasis will be looking at skill capabilities below the current grade; the Union’s Executive team stated in response that this would not be acceptable as under the Newgrid commitments there is a requirement to find work at a compatible grade. 
• Review of Global Sourcing.  Management were less than clear on when and how this would take place.  The only clear positive statement was in regard to any future proposals and it would appear that a far more stringent business case approach process would be put in place.  A not so clear and positive statement was made on existing arrangements and the Union’s team reminded management that a number of existing off-shoring agreements retain the principle of repatriation of work to the UK.  In response management stated at least two thirds of the work executed off-shore was in systems applications and therefore work not appropriate or compatible with work undertaken by most BT people.
• In-sourcing/Off-shoring.  Discussions have already been agreed in principle between BT Wholesale and the Union on bringing work into BT Wholesale which is currently executed by third party supply.   

Finally, the Company intends to open up revised terms for Newstart which will be operated by the Lines of Business according to operational need.  The terms are the standard one-month per complete year of service and capped to a total of 18 months salary.  There exists limited funds for Early Leaver payments, but this will be by exception and the Lines of Business case will have to be signed off at BT Group level. 

Further reports will be issued on an on-going basis after discussions have taken place at BT Group level.