RealTime IT News

Red Sky Interactive Axes 70

In another instance of I-shop cuts and reorgs, some employees at Red Sky Interactive got an unpleasant start to the holiday season, when their positions were eliminated to "refocus" the company's direction.

Spokespeople from San Francisco's Red Sky confirmed on Wednesday that the 13-percent layoffs, which were effective immediately, had been made the morning of Nov. 30. Chief executive officer Bill Bingham then announced the cuts to the remainder of the company during a teleconference later in the day.

Sarah Haun, the company's vice president of communications, said most of the 70 let go were "mostly non-billable resources."

The company also cited a refocusing on core competencies -- prompted by a "changing market" -- as reasons behind the cuts.

"We're evolving our vision," she said. "We were taking a look at what we were doing, and saying 'lets focus this on groups that make sense, and apply the resources that had the best training and experience in those areas, and deploy them,'" Haun said.

The company always had "an overall strategic vision ... [now,] it's just a process of filling in the blanks of the vision," she said.

According to Haun, the company will refocus its efforts on systems integration, interactive marketing and entertainment-oriented interactive work. "Ultimately, she said, "the goals are to maximize your client satisfaction and accelerate profitability."

Red Sky joins a growing list of interactive agencies' undergoing job cuts and internal restructuring. iXL, marchFIRST, Viant and several others announced within the past month that they would be eliminating positions, amid sluggish revenues and traditional clients' reluctance to invest in technology projects.

Red Sky boasts a number of traditional clients, including Miller Brewing Co., Paine Webber and Texaco, which in October made a minority investment in the firm.

But a former employee suggested that several clients had recently backed out of work with Red Sky, and that "several expected projects had not been signed."

"A key project that we were released from was one out of Chicago," said the former employee. "That was a blow, as we had ramped up to support that one, and due to a variety of issues, we were released by them midway through the project. There were some projects, that were expected to close in October, but those had been pushed into January."

Haun denied that expected projects had fallen through, said that client work was continuing for the firm.

"There were signed contracts, but the work hadn't started yet," she said. "The work still will happen, it's just not sure when."

Haun added that the layoffs affected Red Sky offices across the country, and would allow the firm more focus "on regional activity and serving clients closely."

Haun also waved aside speculation that some of the positions eliminated were overlapping posts introduced through March's merger with Nuforia. Nuforia itself was the result of a 1999 merger between branding and communications consultancy Belk Mignogna Associates and technology firm Net Explorer. Red Sky also merged in September with two independent shops, Olive Jar Studios And White Noise Productions.

"The company had grown almost 110 percent in the previous year," she said. "Both with the growth of the company and the changes in the industry, we had to make sure we were operating at peak efficiency and reallocated resources in the appropriate directions. The cuts were not due to redundancy ... we eliminated positions that no longer made sense with the direction that we're going."