Telstra (ASX:TLS) has slashed hiring from several tier 1 contractor agencies and ordered them not to renew Statement of Work (SoW) contracts. The decision came as over a thousand contractors were stood down for six weeks over the Christmas period.
ARN understands that Telstra has stopped sourcing SoW contractors from its Contract Labour Panel, which is one of two groups of companies that provide IT staff to the telco giant.
The move means a number of major IT recruitment firms and their contractors could lose out on lucrative Telstra deals. These include Peoplebank, Robert Walters, Ambit, Paxus, Candle ICT and many other companies.
Peoplebank COO, Peter Acheson, claimed the move had nothing to do with the performance of the panel or the contract staff it had provided. SoW contactors can still be hired, but this will be done by a separate IT professional services panel of companies.
“What [Telstra] is saying is that for a period of time SoW contractors moving forward will need to be sourced through the professional services panel,” he said. “I’d anticipate [the measure will last] a couple of months and it should also be highlighted that they can put people through the Contract Labour Panel, but it’ll have to be under a different arrangement.
“This is a cost reduction measure…it’s about reducing the headcount ultimately, trying to slow the recruitment process,” he added. “I expect it’ll have an impact over the next couple of months, but once we go through the Christmas/New Year period things will improve.”
The freezing of SoW contractors from the Contract Labour Panel coincides with a move by the telco to start replacing them with full time staff. ARN understands that contractors with more than 12 months experience may be allowed to apply for permanent roles, but could not confirm how many positions will be created.
A spokesperson for Telstra said there would be no changes to the panel members, but could not confirm if or when they would recommence hiring by time of publication.
The move to cut contractor positions comes as a Bill to structurally separate Telstra passes through the Senate. The telco is gearing up to get more revenue from wireless broadband and applications while decreasing its fixed line business.
For contractors unsure of what the future holds, Acheson reccomended they evaluate how important their current project is to the company and speak with their agency about what may happen.
A spokesperson for Robert Walters said the company could not extensively comment on the issue.
"We're working closely with Telstra to ensure the best outcome for our contractors," the spokesperson said.