Bloomberg News

Deutsche Telekom Said to Move Up to 1,500 Jobs From Germany

January 12, 2012

(Updates with analyst comment in fourth paragraph.)

Jan. 11 (Bloomberg) -- Deutsche Telekom AG’s T-Systems computing-services unit intends to move as many as 1,500 jobs outside Germany to foster closer ties to overseas customers and reduce costs, said a person with knowledge of the plan.

T-Systems, Europe’s largest provider of cloud-computing services, is evaluating where to create the new positions, said the person, declining to be identified because the deliberations are private. The unit employs 48,000 people globally, about half of them based in Germany.

Deutsche Telekom Chief Executive Officer Rene Obermann is intensifying efforts to reduce expenses as the European debt crisis dampens demand and challenges an attempt to return its non-German business to growth. T-Systems aims to start making the changes within the next six to 12 months through measures including severance packages for older employees to keep the unit’s total headcount largely unchanged, the person said.

“When you look at Germany or Europe in general, the potential growth is mainly in niches or comes at the expense of competitors -- and that hits your margin,” said Jan Goehmann, an analyst at Norddeutsche Landesbank Girozentrale in Hanover who recommends investors buy Deutsche Telekom shares. “We’ll have to see how they can use this to win new customers.”

Harald Lindlar, a spokesman for Bonn-based Deutsche Telekom, confirmed that the company may move jobs away from European countries, declining to give specific numbers.

Mexico, Brazil

“On the one hand we’re forced to choose places where wages are lower, and on the other hand it’s important that our customers are there,” Lindlar said. “If you think about Mexico or Brazil, they have a strong automotive industry and that’s a sector we’re leading in as well.”

T-Systems, led by Reinhard Clemens, is working to standardize services to reduce costs, meaning employees won’t have to start from scratch on new projects. The unit’s reported earnings before interest, taxes, depreciation and amortization equaled 4.3 percent of sales in the most-recent quarter. That compares with 14.7 percent for Accenture Plc and 23.5 percent for International Business Machines Corp., according to Bloomberg data.

Deutsche Telekom shares declined as much as 0.7 percent to 8.91 euros in Frankfurt trading and were down 0.2 percent as of 3:38 p.m. That values the T-Systems parent at 38.6 billion euros ($49 billion).

T-Systems, whose European operations include sites in Debrecen, Hungary and St. Petersburg, Russia as well as in the Czech Republic, partnered with Cognizant Technology Solutions Corp. in 2008 to expand its reach and cut costs. It’s also boosted its own operations outside Germany for computing resources such as storage and software via the Web.

Last month, Deutsche Telekom set a target of 1 billion euros in savings by 2015 through the merger of its internal computing and communications systems into a T-Systems unit, a person with knowledge of the matter said at the time.

--Editors: Kenneth Wong, Simon Thiel

To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net


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