Qwest to cut loose 11,000 workers

By Denise Pappalardo and Tim Greene
Network World, 09/11/00

DENVER - Qwest Communications set some ambitious goals late last week as the telecommunication firm said it would cut 11,000 employees from its 70,000-employee payroll.

Joseph Nacchio, chairman and CEO at Qwest, outlined a plan to double its customer base in key services area such as DSL, Web hosting and wireless, while significantly reducing the company's workforce and expenses. Nacchio's plan for the "new" Qwest comes two months after it acquired regional carrier US West and tries to gear up for fast growth.

As part of its cost-reduction strategy the company will lay off 4,500 employees this year and 6,500 by the end of 2001. The combined Qwest and US West will be eliminating positions at all levels of the company. Qwest is also eliminating 1,800 contractors by the end of next year.

Cost reductions will also come from tighter travel budgets and fewer employee perks, Nacchio says. All the while, Qwest expects to improve customer service, which has been a problem for the company. Qwest, by virtue of its purchase of US West, is under order from multiple state public utility commissions (PUC) to improve customer service. US West ran afoul of the PUCs when it consolidated its service centers and laid off too many service workers. Later, it had to hire some back.

"It's hard to imagine they could cut back more than they have already and meet the commitments they've made to the PUCs," says Jon Etherton, network coordinator for the Spokane Spokesman-Review in Spokane, Wash., who buys a mix of T-1, DSL and business phone lines from Qwest.

Start-up moves?

It may be that Qwest is trying to impose a little bit of aggressive start-up business methods on a lumbering, regulated behemoth, others say.

"It's a case of Nacchio trimming things down and bringing US West into line with Qwest's lean, mean mode of operation. He could see a lot of scope for trimming the fat in what has basically been a very bloated and some would argue the least effective of the [regional Bell operating companies]," says Carl Garland, an analyst with Current Analysis, a market analysis firm in Sterling, Va.

Qwest says it expects revenue to be $18.8 billion to $19.1 billion this year, above its previous forecast of $18.5 billion.