Deutsche Telekom to trim IT service unit

ITworld.com |  Networking

As part of its ongoing cost-cutting efforts, Deutsche Telekom AG (DT) aims to trim its IT service operations, particularly in Germany, but has no plans to unload the unprofitable business.

T-Systems International GmbH, which provides IP (Internet protocol), data and hosting services to corporations, plans to consolidate its offices in metropolitan areas and reduce the number of its data centers by half, said Chairman Christian Hufnagl, Monday in an interview with the business newspaper Welt.

But the unit, he said, will remain one of DT's four business pillars.

In addition, some jobs in the IT service unit will be eliminated, Hufnagl said, declining to provide numbers.

According to the Welt news report, which cites industry sources, T-Systems plans to axe between 4,300 and 6,500 jobs in its 43,500 workforce. Over two-thirds of those job cuts will be in Germany, the newspaper reported.

A DT spokesman declined to comment on numbers published by the Welt, saying only that T-Systems, like all units in the group, is under pressure to lower operating costs, which includes job cuts.

Despite the cutbacks, T-Systems plans to establish a stronger presence in Asia and the U.S. "Our goal is to become the only real global player to come out of Europe," Hufnagl told Die Welt, without explaining how he plans to expand the unit's footprint while under pressure to reduce spending.

T-Systems is competing against the likes of Electronic Data Systems Corp., IBM Corp., AT&T Corp. and troubled WorldCom Inc.

One area of business in which T-Systems aims to win more contracts is IT outsourcing, which currently accounts for 30 percent of the unit's revenue.

Separately, the spokesman confirmed that DT has lowered its 2002 group investments to

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