Top African Tech Firm Delivers Profit is to retrench some of its more than 3000 employees in a bid to save costs, citing “dramatic changes” in the information, communications and technology (ICT) industry.
Gijima returned to profitability in the six months to December last year after reporting losses over the same period in 2010 due to write-offs relating to a settlement with the Department of Home Affairs over a R2,4bn technology tender.
The group said yesterday the retrenchments were aimed at “improving efficiency and reducing the cost base”.
But it would not disclose the number of employees facing the axe “due to the consultative HR (human resources) processes that we need to follow”.
CEO Jonas Bogoshi said the changes in the global market warranted a reassessment of Gijima’s business operating model to make it relevant.
“Our aim is to enhance our business competitiveness, and that of our valued clients, and this optimization strategy will enable us to do just that, without compromising our track record of quality service delivery,” he said.
Mr Bogoshi said the strategy was part of Gijima’s Vision 2025 plan, launched last year. The first phase of the implementation of the new business structure had resulted in “some role duplication and staff underutilization”, which the group was now correcting.
“Unfortunately, this will include reducing its human capital costs by between 8% and 12%, depending on the business area. Top talent will be retained across the company’s skills value chain to ensure Gijima continues its track record of excellent quality service and delivery,” he said.
The company said ICT spending globally “is under pressure and commoditised offerings have become the most price-sensitive. At the same time, clients, particularly those in the financial sector, have come under pressure to be even more competitive following global acquisitions.”
Gijima would focus on ensuring its cost structures “remain relevant to its growth plans and market expectations, and are in line with turnover targets”, the company said.
In February Gijima said it had spent R18m on restructuring its business and converting the operating model from “a product-or business unit-centric structure, to a client-centric structure”. This meant changing certain senior management roles to focus on “industry expertise, rather than technical ability alone”.
In March it said about 200 employees would be absorbed by Absa , which decided to bring in-house part of the technology business it had outsourced to Gijima.
It reported a profit of R28,6m for the six months to December from a loss of R271m in 2010.
The dispute with the Department of Home Affairs was resolved amicably but although Gijima would continue changing its systems and infrastructure, this would not yield the level of profit initially expected. It expects to earn revenue from the contract in the year to June this year.