AT&T Says it Will Stick With 3,500 Layoffs

AT&T said it has no plans to lay off more than 3,500
employees throughout this year, disputing sources familiar with the company
that said the number of pink slips could hit just under 5,000.

A spokesperson for AT&T, Sue Fleming, said the layoffs, which were
announced on January 6th, are being implemented in a rolling timetable
throughout the year. “Some have been notified, some will be notified,” she

The job cuts, she added, are largely the result of increasing automation
and new technology deployment across the telecommunications giant. As a result, customer care work historically deployed on-site is increasingly addressed with software, remotely.

The company has deployed new software and provisioning upgrades to its
network that enables technicians to upgrade customers’ requests for more or
less services from remote locations.

The cuts represent about 5 percent of the company’s 70,000 staff, Fleming
said. While they are being spread to different divisions within the phone
company, she said the business services division could experience a slightly
higher proportion because of the new automation services.

Fleming refuted two sources familiar with the company who said the cuts
could be closer to 5,000, or just over 1,000 more than had been expected, again due to
efficiencies that automation and outsourcing have introduced in the past

In January of 2002, for example, AT&T and Accenture announced a five-year, $2.6 billion
outsourcing agreement
designed to cut the phone company’s long-distance
customer care costs in half and deploy new customer relationship management
technologies. At the time, the company said the arrangement could result in
layoffs within the phone company.

On Monday, Fleming said no changes to the 3,500 number had been planned.
That figure
represents about 5 percent of the workforce.

The cuts come as AT&T enjoys a bounce in customers that
have switched to AT&T for their data and networking needs in the wake of
uncertainty wrought by the bankruptcy reorganizations of long-haul providers
Global Crossing and WorldCom. But it also comes as the long-haul provider deploys state of the art technology that essentially replaces the need for humans to go on-site.

In early 2002, AT&T rolled out a beefed-up optical network that includes self-diagnostic intelligence and provisioning to help clients add and improve capacity on the fly. The upgrade, including new “smart” switches and routers, is connected with over 40 cities and features data rates of 45 megabits per second to 10 Gigabits per second (Gbps).

The upgrade includes self-diagnostic intelligence on the network so that if, say, connectivity is disrupted or fiber is cut, the software can help decide where else to route and restore circuits across a mesh backbone. Before, the work entailed an on-site visit with trouble shooting that sometimes stretched into weeks.

On the VPN (virtual private network) sector of managed services, AT&T is surging, analysts note. Steven Harris of tech research firm IDC puts AT&T in the number one slot among the top ten providers in IP VPN services during 2002.

“Fierce battles over customers characterizes the market shares for
managed IP VPN services,” Harris wrote. “The revenue from the IP VPN
services market is distributed widely among the major
carriers/ISPs/outsourcers in the United States, although a few stand out as
big players,” he said. Tops is AT&T, followed by WorldCom and managed
service provider SAVVIS .

IDC expects that the carrier portion of the IP VPN market will grow from
about $2.3 billion in 2002 to more than $3 billion by 2007.

In the face of a global slowdown in IT spending, as well as ongoing
turmoil in the telecommunications industry in the past two years, AT&T has
been steadily building out its networking capacity.

In July, for example, it
added 20 more
points of presence
to the existing 102 it already has in its pipeline.

The 20 extra nodes are slated for Europe, Latin America and Japan, the
result of customer demand, a company official said. Although Latin American
plans were said to be under review in recent weeks, the company has said
that, as part of a $300 million upgrade, it plans to be serving all of its
customers on one network.

AT&T’s global network division is a major backbone of its outsourcing,
managed services and connectivity products. The global network is based on
the same platform that is deployed in the U.S.: Multi-Protocol Label
Switching (MPLS) technology on an optical core.

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