Big job cuts at South African tech companies in 2020

Thousands of workers at South African tech and tech-related companies have lost their jobs in 2020.

With the country’s economy already in a recession in the first quarter of the year, many companies were struggling to keep head above water even before the COVID-19 pandemic hit.

With the government’s lockdown restrictions severely impeding the ability of many industries to continue operations – in some instances completely shutting them down – multiple businesses were forced to implement salary cuts or to ask staff to take unpaid leave or furloughs.

Others had no choice but to opt for the more severe process of cutting staff or risk going bust.

According to Stats SA’s Quarterly Labour Force Survey for Q2 2020, more than 2 million South Africans lost their jobs in the second quarter of 2020 – during the height of COVID-19 lockdowns.

The latest CareerJunction Index (CJI) report also revealed that hiring activity decreased significantly for ICT professionals since the onset of the national lockdown in March.

The winners

The silver lining to the pandemic is that it has driven demand for connectivity – which is facilitated by online communications and other technologies like the cloud.

This has led to huge growth for many of the world’s tech heavyweights – including Microsoft, Google, Amazon, and Zoom.

In South Africa, the need for connectivity boosted business for Internet Service Providers and mobile networks in particular.

Several major ISPs have previously told MyBroadband that they had actually been able to increase employment during this time.

The country’s two biggest mobile networks – Vodacom and MTN – have also said they did not plan to make any staff cuts in 2020.

However, several other tech companies in the country have not been so lucky, in part due to the economic conditions, but in certain instances also because of strategic realignment and attempts to improve financial performance and management outside of the pandemic.

Below follows a summary of the announced retrenchments at various major South African tech and tech-related companies.

It should be noted that the actual number of employees confirmed to have been cut may differ from the announced estimates.


Cell C – 1,536

Embattled mobile operator Cell C originally announced back in June that it was initiating a Section 189 process that could see a total of 960 jobs within its junior management and semi-skilled staff complement being cut.

This followed a restructuring of its senior management earlier in 2020 – which saw 30 employees retrenched.

The company later also revealed it planned to close 128 of its retail stores and cut 546 jobs as part of its ongoing turnaround strategy.

The retrenchment consultation process started on 30 July 2020 and the company has subsequently made a voluntary severance package offer to impacted employees.

“The process is still underway and no final decisions have been taken,” Cell C said.

Cell C logo on iPhone


Dimension Data – 480

Dimension Data announced in May 2020 it had initiated retrenchment proceedings as part of the consolidation of its four brands of Dimension Data, Internet Solutions, Britehouse, and ContinuitySA into a single operating entity under the Dimension Data name.

“The main reason for this change is to provide a single portfolio of services to clients and improve client experience, as well as to streamline operations and future-fit the Dimension Data business,” Dimension Data said.

“As a result, our workforce requirements have changed. We intend to remove role duplication, and consolidate platforms, tools and processes into single instances, and flatten our structure.”

This would potentially impact approximately 480 employees, the company said.

These cuts follow executive and senior manager retrenchments at Internet Solutions in December 2019,

Dimension Data said that while reducing costs is not the primary objective of its new model, the effects of COVID-19 on the business has made these changes necessary.

Dimension Data log on glass


Dion Wired and Masscash – 1,440

The demise of high-end tech outlet Dion Wired came before South Africa entered the initial COVID-19 lockdown.

Massmart announced that it would undertake a Section 189 process that will see the closure of Dion Wired and Masscash stores. Bloomberg later reported this would potentially impact 1,440 employees.

Dion Wired closed its doors with immediate effect on 19 March 2020.

The reason for the closure was evident – Massmart’s financial results for 2019 showed its Massdiscounters division, which comprises Game and Dion Wired, reported a 2,169.3% decrease in trading profit compared to the previous year.

The trading loss for 2019 stood at R674.6 million, as opposed to R32.6 million in 2018.

Dion Wired


Game – 1,800

In July 2020, Massmart made another statement in which it said 1,800 Game employees were at risk of losing their jobs.

This was after the company made an assessment of how it could improve the efficiency of its Game stores.

As a result of this assessment, it began a Section 189 consultation process that could result in major job cuts.

The outcome of the consultation process remains to be confirmed.

Game


Liquid Telecom – Unknown

Liquid Telecom Group’s pivoting towards a focus on digital services, and its recent rebranding to “Liquid Intelligent Technologies” has also seen it send notices of retrenchments to employees, although it is unclear exactly how many positions were affected.

Liquid Telecom Group CEO Nick Rudnick told MyBroadband that the objective of the company’s “strategic repositioning” was not to cut staff but to change its product portfolio.

“With the different product set, we need to be able to work with [our customers] and have a whole different level of expertise than we have had in the past because this isn’t just about connectivity, it is about the provision of technology on an individual basis,” Rudnick said.

“We have needed to take a deep look at ourselves right across the group in all of the countries we are in and we have had to make sure we have the right people in the right places with the right skills,” he said.

Rudnick noted that Liquid Telecom had to create new positions because there were new technologies the company did not have the skills for.

liquid telecom


SABC – 400

After initially stating it was considering the retrenchment of 600 employees, the South African Broadcasting Corporation (SABC) announced in November that it will cut up to 400 jobs.

The public broadcaster said it has exhausted all other options, and it has to take this step to ensure sustainability going forward.

“In carefully considering all proposals from organised labour and other stakeholders, it became clear that, sadly, our organisation requires a difficult but necessary restructuring process that will result in the reduction of staff,” the SABC said.

“The SABC is fully cognisant of the fact that this process will affect people’s livelihoods and, moreover, have a knock-on effect on their families and communities,” it added.

SABC office


Telkom and BCX – 2,804

Early in 2020, Telkom said it would have to cut jobs partly as a result of investments in new technologies and revenue streams, particularly in its mobile business, which have taken their toll on profitability.

“Telkom has also seen a sharp decline in fixed-voice and interconnection revenues as customers shift towards new technologies, such as fibre to the home. This trend will continue,” it said.

It has also blamed difficult economic conditions and having to reposition itself amid fundamental changes within the telecommunications industry.

The company initially indicated that it was planning to retrench 3,000 employees as part of a process which would take place in two phases.

The Federation of Unions of South Africa (FEDUSA), however, highlighted that this was only for the first phase of retrenchments.

It claimed another 1,000 Telkom employees face retrenchments in May 2020 while an estimated 2,000 staff members could lose their jobs at Telkom subsidiary BCX shortly after that – bringing the total to 6,000.

According to Telkom’s latest interim results for H1 FY2021, it had reduced its total workforce by 2,520 employees across the group between September 2019 and September 2020.

BCX has also announced it will have to implement significant job cuts as changes are made to its operating model – impacting approximately 284 jobs.

Telkom logo presentation


Uber South Africa – Unknown

Uber South Africa declined to share numbers or information about two sets of job cuts affecting over 6,500 employees globally – accounting for over a quarter of the company’s total staff.

“While we cannot share any local numbers, we can confirm that employees in over 50 countries were impacted,” said Uber South Africa.

“As we said in our Q1 earnings call, our global Rides business was down around 80% in the month of April.”

“With people taking fewer trips, the unfortunate reality is that there isn’t enough work for many of our frontline customer support employees,” it said.

UberEATS header


Now read: South Africa now has more unemployed people than people getting a paycheque

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Big job cuts at South African tech companies in 2020