Sprint Corp. on Wednesday revealed the full scope of its recent rounds of job cuts and offered fresh details on how the Overland Park-based company is shrinking its payroll.
All told, 3,700 job cuts this fall will hit 11 percent of Sprint’s employees company-wide and a slightly smaller percentage of those in the Kansas City area, according to details the company provided.
Sprint has turned to payroll cuts as part of an aggressive campaign to reduce budgets and overall spending by $1.5 billion under newly named chief executive Marcelo Claure. In discussing the company’s quarterly financial results Monday, Claure said the difficult measures were necessary to compete against other wireless companies.
Those measures include eliminating 2,000 jobs in the next few months. The company previously reported that it eliminated at least 687 jobs in October among its network, technology, information technology and portfolio management groups.
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But on Wednesday, the company revealed that the October cuts hit about 1,700 employees in total, or roughly 1,000 more than previously disclosed. The 2,000 pending job cuts, which will come throughout the company, will bring the total workforce reduction to 3,700.
Spokesman Doug Duvall said Sprint was offering voluntary buyouts to reach at least part of the 2,000 jobs left to be cut. Layoffs would follow if needed, he said.
“We are offering a voluntary separation program for any employee that wants to raise his or her hand,” Duvall said. “Should that number not amount to the 2,000 necessary corporate-wide, then we would engage by business unit in involuntary separations to get to that target number.”
Duvall said the buyout offer was based on an employee’s years of service and amounted to the same amount an employee who is laid off would receive. The voluntary buyout is not available to some employees in customer care and sales, he said. He clarified an earlier company statement by saying that individual employees have not been identified for layoffs.
Employment in the Kansas City area will end this week at about 6,800, Duvall said. The local job count had been 7,500 earlier this year.
The company formally announced 452 job cuts at its Overland Park campus and 235 at its Reston, Va., offices last month. Kansas City area employment will increase when Sprint reopens a local customer call center with about 200 jobs.
In total, the 3,700 jobs that Sprint is shedding this fall are coming off of a payroll that totaled 33,000 in mid-September. It continues a steady decline in Sprint’s total head count.
Sprint’s employment had fallen from 39,000 at the end of 2012. Some of that decline had come from store and customer call center closings early this year.
October’s layoffs and other employment changes, such as normal attrition, retirements and small cutbacks, have left Sprint with 31,000 employees. The 2,000 job cuts would trim that total to roughly 29,000, which means about one in four Sprint jobs have disappeared in the last two years.
Claure said Sprint needs to cut jobs and reduce other spending because its costs are “out of whack” with the rest of the industry.
Berge Ayvazian, an industry consultant at UBM Tech, said the cost cutting was not a goal but a means to Claure’s priority of adding customers.
“The fundamental problem is not their cost structure, their layered management structure, having too high a cost or too many employees,” Ayvazian said. “It’s the fact that customers are not attracted to Sprint as an operator and therefore their customer base is shrinking.”
Ayvazian said reducing costs gives Claure room to battle T-Mobile for customers particularly on price, given that Sprint’s network remains slower than the three other national carriers’.
Sprint said Monday that it continues to lose its most valuable customers, those who traditionally have signed two-year contracts for mobile phone service. It has been adding to its overall subscriber count as customers connect tablets to the Sprint network or come to it through wholesale arrangements, each of which generates much less revenue for Sprint.
Shares of Sprint have fallen sharply since the late Monday report of phone customer losses and a less optimistic financial outlook by management. The stock fell 26 cents, or 5 percent Wednesday, and closed at $4.92. It lost 16.5 percent Tuesday.
Duvall said not all of the recent 1,700 job cuts company-wide had been layoffs. Some employees, he said, “get re-badged to a vendor.” That means the Sprint employee continues to work but becomes the employee of another company hired to do that work for Sprint.