Spark is looking to make up lost ground in its drive to slash its labour cost by $50 million and reduce operating expenses by more than $30m this financial year.
Spark is looking to make up lost ground in its drive to slash its labour cost by $50 million and reduce operating expenses by more than $30m this financial year.
Spark has inked a deal with Indian outsourcing giant Infosys that it says will reduce its IT operating costs - a sore point with analysts disappointed by its first half result.
Some in-house jobs will go but the company is staying tight-lipped on how many roles are affected.
“I can’t provide the detail of the total number of roles reduced,” a Spark spokeswoman said.
“However, not all of the impacted people will be offered opportunities within Infosys.”
She could not say if those transferring to Infosys would have the same salary or benefits, citing that they would be under a new employment contract with the Indian firm, which will expand its local operation to accommodate those moving across.
Spark marketing and data director Matt Bain said the telco had worked with Infosys for more than 16 years.
The new “strategic IT collaboration” would help Spark reduce its costs while “accelerating Spark’s strategy of enabling digital and AI-driven customer experiences”.
Spark is on a drive to save $80-$100 million in labour and operating costs in its 2025 financial year, ending June 30 - including $50m from cutting around 10% of its workforce, implying around 500 layoffs.
A “significantly expanded cost-cutting programme” was promised for the second half.
While Spark has not released any financials around its new Infosys collaboration (or other deals with Microsoft and HP Enterprises), Forsyth Barr analyst Aaron Ibbotson told the Herald, “With this deal in particular, there will be some meaningful staff reductions.”
He added, “What Spark is trying to do is clearly painful for some employees. But they have to introduce a degree of flexibility into their cost structure. So when the cost demand picks up, they can scale their partnerships. And when demand falls they can reduce capacity without having to layoff staff.”
Ibbotson said the bigger picture was that, “Spark revenues have been flat for a decade. There’s always been a part of the business in structural decline.”
That meant the only way to boost profit was to cut costs.
The second Trump Administration’s protectionist push is a threat to Infosys and Tata’s services exports, according to a Wall Street Journal report.
Weightless software and services are not subject to the US President’s new round of tariffs, but the Journal says both of the big two Indian outsourcers have tens of thousands of staff reliant on the H-1B visas used by the tech industry, which are the subject of a Trump crackdown.
The visa enables Indian technology experts to work temporarily in the US.
New Zealand’s Government has taken a different approach, with Prime Minister Christopher Luxon, Trade Minister Todd McClay and Tourism Minister Louise Upston visiting Tata’s campus in Mumbai during their March trade trip to India.
Air New Zealand CEO Greg Foran was also in attendance. The occasion was his airline signing a five-year contract with Tata Consulting Services (TCS).
“The concern for Air New Zealand’s digital workers is that partnering with TCS will simply mean more outsourcing by the airline,”
Savage, head of aviation, E tu union. Photo / Greg Bowker
“The concern for Air New Zealand’s digital workers is that partnering with TCS will simply mean more outsourcing by the airline,” said Savage, head of aviation for E tū.
“The airline has already outsourced a large part of their aircraft maintenance and call centre operations. They still have outsourced cabin crew base in Shanghai,” the union rep said.
A spokeswoman for Air New Zealand responded, “Air New Zealand works with a number of tech partners here and offshore, such as Accenture. No roles have been disestablished to bring on these partners.”
Some local employees may undertake upskilling - workforce transformation will be a key focus of this engagement, with TCS leading upskilling programmes to strengthen digital capabilities across Air New Zealand’s teams in AI, cybersecurity, and digital engineering. TCS will be having specialists on the ground, too, within Air NZ.
“For all workers, AI is both a tool they can use and a threat to their jobs,” Savage added.
“If new technology creates upheaval workers need to have a voice and have a choice about what happens to their livelihoods. The drive toward AI everywhere must include a just and fair transition for all workers.”
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
