In an effort to limit workforce redundancies, Mitel will lay off over 300 employees around the world by the end of 2017. The update was announced during the first-quarter earnings report given in early May.
The telecommunications company, based in Kanata, has said that it will cut around 10% of its total worldwide workforce by the close of this year. Those cuts are set to be felt evenly in different segments of the business. According to the CEO of the company, Rich McBee, there will even be a loss of around 60 jobs from operations in the National Capital Region. Around 600 people are currently working in the Kanata building, while the company maintains 3,200 employees globally.
The Reasons Behind the Layoffs
The layoffs are an attempt to reduce further redundancies in Mitel after the sell-off of Mitel Mobility (Mavenir). Currently, the company is taking steps to merge its enterprise-service divisions and cloud-selling divisions. Previously, these areas had been separated while the firm continued to grow the business. However, at this stage, the channel has grown to a stage where the groups will work best together.
The merger ensured that many roles in the firm, including human resources, management, general, finance, and even administrative or lab roles, will have been duplicated. According to McBee, this duplication is the reason behind the layoffs, and he refuses to admit that there might be any problems with financial flow.
According to the Q1 results, Mitel believes that it can achieve savings of around $30 million each year thanks to this action. For the quarter that ended March 31st, 2017, Mitel had earned revenues of $223.1 million, which is a loss of around $10 million from the previous year. Additionally, they announced a net loss of around $19.7 million for the quarter.
The Future for Mitel
It’s safe to say that the markets for Mitel reacted poorly to tales of the layoffs. The shares for the company dropped by around 7% on the TSX. However, Mr. McBee continued to remain optimistic about the future that Mitel held in Kanata when speaking in interviews.
He believes that, despite the coming job reductions, the engineering work that is conducted in Kanata remains vital to the company, and crucial to the government. Ontario has recently seen some changes to funding possibilities, after the Federal Government announced funding “superclusters”, and a $63-million CENGN investment.
According to McBee, the company will be taking advantage of the fact that the government is investing in Ottawa, and even commented that certain operations from around the world might be relocated to Kanata.
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