BT has said it will cut 15,000 jobs, after a difficult year that saw an “unacceptable performance” in its IT services division, which booked £1.6 billion in contract charges.
But the company, which cut the same number of jobs in the last year, made little mention of the problems in its beleaguered patient records rollout in the NHS.
It only said: “We continue to make progress on our NHS National Programme for IT contracts”.
Reporting an annual loss of £134 million for 2009, compared to a £1.9 billion profit a year earlier, BT said it had completed IT contract reviews “including the two major contracts that are the subject of ongoing commercial discussions”.
“As a result, the group has recorded a further charge of £1.3 billion, of which £1.2 billion relates to two major contracts,” it said.
One of the two contracts believed to be responsible for a significant part of the writedown is its £1 billion contract with the NHS, part of the £12.7 billion overhaul of the NHS's computer system. A BT spokesperson refused to elaborate on the reports.
The Global Services division itself crashed into a £2 billion loss, from a £139 million profit in the year earlier.
BT said that “management actions being taken to enhance the contract management” and finance management processes would improve the value it takes from deals.
But in the NHS programme, contract negotiations are understood to have resulted in only a memorandum of understanding being signed between the government and BT. Again, BT has refused to confirm or deny the reports.
BT, like fellow NHS IT contractor CSC, is only paid for work completed on the patient records programme. Following delayed rollouts in London, it is understood to have received only a fraction of what it has spent doing the work.
Chief executive Ian Livingston said the management of BT Global Services had been changed, and promised the operation would be turned around. A recovery programme for BT Global Services was now “in place”, he said.
Across the group, BT is set to pay £525 million each year for the next three years to pay off a large pension deficit.
Scott Morrison, Gartner research VP, said: “The writeoffs on the remaining two major contracts have proven to be much higher than expected, which suggests BT is trying to draw a quick line under its past expansionist strategy, and focus on growth with margin for the new financial year.”
The redundancies “should streamline some of the back-office operations, and won’t just affect the market-facing units such as BT Global Services”, he said.