BT Group PLC's (LSE:BT.A) plans to reduce its 2,900-strong workforce at its Adastral research and development centre in Suffolk exposes shortsightedness that could harm the telecoms giant’s long-term competitiveness.
That BT is cutting jobs should come as no surprise given it unveiled plans in May to axe up to 55,000 company-wide jobs alongside a fall in pre-tax profits (and an unchanged dividend).
But, in an industry of scale and technological change, R&D skills are not as easily replaced by “digital” systems as BT may presume.
This is the take given by Robert Grindle, head of European TMT research at Deutsche Bank.
He commented: “We believe this reflects BT's decreasing willingness to support what used to be a world-beating R&D function, with potential consequences for longer-term competitiveness, including the ability to influence telco standards and be 'ahead of the curve' in new technologies.”
Yet BT is under short-term pressure to rein in costs as it steams ahead with capital-intensive full-fibre rollout across the UK, especially if it wants to keep dividend-hungry shareholders happy.
In a press statement, a BT spokesperson said: “We’re consolidating into a smaller number of buildings around the UK that provide cutting-edge technology and great working environments for our people.
"As part of these activities, we’re proposing to reduce the size of our presence at Adastral Park and move some roles to other BT Group locations over the next two years.”