Digital transformation costs jobs at Vodafone

Vodafone Spain is cutting around 12% of its workforce, shedding staff that do not fit with its digital transformation push.

The telco announced that it is beginning a process that will see it shed up to 515 jobs. Its statement is worded in such a way as to imply that the move is linked to competition, and to an extent it is: the market remains pretty fierce in Spain. But there is no escaping that the cuts come as part of the telco’s ongoing strategy to embrace digital technologies.

“The decision to initiate this procedure is justified for economic, productivity and organisational reasons, and is driven by the market trend in the telecommunications sector and by the need to improve operational performance by accelerating [Vodafone’s] digital transformation strategy,” the telco said, in a Spanish language statement.

We often hear about the range of new jobs that will be available in the new digital world, and indeed Vodafone is keen to share that it will be hiring as well as firing.

The loss of staff in Spain – mainly in commercial areas – comes alongside Vodafone’s efforts to capture new business opportunities in the digital space, the telco noted. “This process began in May with the launch of the Vodafone Group’s R&D Centre of Excellence, located in Malaga, with more than 600 new highly qualified jobs, to which more roles will be added in the next 12 months at Vodafone Spain,” the operator said.

So, it is creating more jobs than it is cutting? Not quite.

That R&D centre is the telco’s European centre of excellence. It carried out a contest of sorts to select a location for it and earlier this year picked Malaga. That’s obviously good news for the city and clearly will create jobs in Spain, but it’s not technically creating 600 jobs for the Spanish operating company. Furthermore, the telco has been a little vague as to how long it will be before it has filled all those promised positions.

In addition, the fact remains that as telcos push on with the digital transformation, key tenets of which include automation, agility and efficiency, they will need fewer people to man the ship.

Vodafone can talk up new hires all it wants, but statistics show that its employee base is only going in one direction.

Vodafone Spain had 4,257 employees at the end of the most recent financial year to the end of March. That’s 59 fewer than it reported at the same date a year earlier, and down by close to 900 on the 2019 figure.

The only major European market in which Vodafone has increased staff in the past two years is Germany, Numbers are down in Italy and the UK too, as well as at group level.

Accelerating digital transformation is one of Vodafone’s top strategic priorities as a group, according to last year’s annual report. “Through standardisation, digitalisation and sharing of processes we are capturing the significant opportunities available to us to deliver best-in-class operational efficiencies and a structurally lower cost base,” it said. That doesn’t just mean fewer people, but it’s certainly part of it. The group said it is looking for cumulative European net opex savings of €1.3 billion, around a 15% reduction over three years, and “role efficiencies” in shared services of 5,500 over three years.

The group is talking up agile working methods – organising its staff into tribes and squads – and upskilling initiatives to help it acquire the skills and expertise it will need in the digital world.

That’s all well and good, but ultimately, digital transformation means fewer people.