ASX-listed IT services firm UXC last week laid off around a dozen employees due to fears that current contracts would be deferred.
Mark Hubbard, UXC finance director (Credit: UXC)
"There have been maybe a dozen [redundancies], which is not too bad considering UXC is a company of around 3,500 employees," UXC finance director Mark Hubbard confirmed via telephone to ZDNet.com.au today.
Hubbard did not say which of the company's three overarching business units — utility-focused Field Services, government and business unit, Business Solutions, or its venture capital group IP Venture — had experienced the cuts, however he said Business Solutions was experiencing difficulties.
"Our Business Solutions Group, that's where things are most difficult," he said.
"This year's difficult to read due to the economic climate. There is enormous uncertainty in any business. We have an order book that remains pretty strong but we're fearful that we will see some of [that work] deferred," he said.
"It's a tough thing to balance utilisation and numbers to deliver contracts versus battening down hatches in case those contracts don't materialise," he added.
The company had contingency plans in place which could see more redundancies occur in coming months, said Hubbard.
"We have layers of planning, so if scenarios eventuate we will take certain actions. Things have to happen or not happen before we do that but we're not sitting on our hands waiting to be caught either," he said.
"Ever since it was acquired we have been restructuring it to improve its margins. We have gone through [redundancies] before but I was not aware of anything last week," he said. Just last month UXC sold part of Getronics' desktop maintenance and service arm to a competitor so that it could focus on professional services.
While Australia's major banks such as National Australia Bank, Westpac and the Commonwealth Bank of Australia have said major technology projects, such as core banking system replacements, would forge ahead despite Australia's uncertain economic outlook, Australia's IT services and software companies are not as confident about the broader climate.
CEO of utility and mining sector software vendor Mincom, Greg Clark said that while companies would spend on technology that supported cost-cutting, it would be prudent for businesses to defer spending in coming months.
"There will be a lock-down globally on IT spend," Clark told ZDNet.com.au last week. "I think it's just prudent that people wait right now to see what's going to happen," he said, adding that technology procurement by way of capitalisation — technology costs treated as an asset — would be limited to those companies with good balance sheets.
"Most organisations capitalise software and hardware procurement — a good percentage of the market does that. So with this financial and credit crisis, there will be a tightening of these budgets... You will have to have a good balance sheet to be able to continue to buy that way, which will take away some of the market," he said.