Australia's largest distributor, Tech Pacific, today made its third staff cut of the year, with another 59 staff made redundant in the face of shrinking revenues.
Tech Pacific managing director David Cullen told ARN on Thursday afternoon that the latest round of layoffs came after the end of a month-long market and operational review, which was put in place after the last cuts in September.
"We set a 30-day time frame to carefully assess where the market was heading and our position in that market, which we have now completed," Cullen said. "This latest round of cuts will match our operating costs with where we see the market going for the next six months."
Cullen said he is positioning the company for what Tech Pacific perceives to be a slow finish to the year and a "very weak start to next year".
"The next six months look to be very difficult," he said. "I don't see any respite until the second half of the year. We see this move [to reduce staff numbers] as planning for next year rather than reacting to this year."
Cullen was keen to reassure Tech Pacific customers that it was not losing any vendor agencies and that its service to the reseller channel would not diminish. He was also adamant that the distributor's plight was nothing to do with the viability of IT distribution as a business model.
"This should not be seen as bad for distribution," Cullen said. "Distribution is not losing market share, it is gaining share. The problem is not the viability of the channel. The problem is that the pie is smaller than it used to be."
Tech Pacific's dominance of the Australian reseller channel has been progressively weakened during 2001. Firstly 83 heads rolled across all business units in April this year in what Cullen then described as a "right-sizing" exercise.
This was followed by a failed divestment process which saw Tech Pacific's parent company, Dutch group Hagemeyer, fail to sell its Asia-Pacific IT distribution group.
The announcement that an injection of funds would not be forthcoming was soon followed by the departure of four key senior personnel along with 21 others, late in September.