EarthLink to cut jobs by 39%

Atlanta Journal-Constitution ^ | 01/07/04 | Bill Husted

[Holly_P]

About 1,300 of EarthLink's 3,300 employees learned Tuesday they will lose their jobs by late March in a dramatic work force reduction by the Atlanta-based Internet provider.

The 39 percent work force reduction comes as EarthLink closes call centers across the country. Those centers handle customer service and technical support calls from EarthLink subscribers -- duties that will be shifted almost entirely to outside companies, located both in the United States and overseas.

In Atlanta, the company's call center will keep a small number of employees, but more than 300 jobs will be lost. Even so, Atlanta will continue to have the single largest concentration of EarthLink employees, with about 1,000 remaining after the job cuts.

Outsourcing customer calls is "part of a larger trend across the industry," said Jeff Kagan, a telecommunications analyst in Atlanta.

"This is the kind of move that Wall Street applauds because it cuts costs, but that doesn't mean it's always a good move for customers," Kagan said.

Speaking as a longtime EarthLink customer, Kagan expressed concerns over the company's ability to provide good customer service.

"It was an oasis of quality" when it came to customer service in the early days, he said. "I've noticed a definite change over the past few years, and not for the better. ... I guess it is as simple as, they're not as good now."

For Charles Brewer, the Atlantan who founded MindSpring and then merged it with EarthLink in 2000, news of the job losses and the shift to outside call centers "kind of hurts."

"And it probably hurts plenty of people who are at EarthLink now," he said Tuesday. "But I'm not in a position to say whether it is a good move."

Link to customers

Brewer, now chairman of Green Street Properties, said a reputation for personal customer service by MindSpring's call center employees created a direct link with customers.

"It would be hard to imagine how you could re-create that with a purely outsourced solution," he said.

EarthLink began restructuring last year as it moved away from using its employees to man call centers, shifting the task to outside vendors.

The company closed some call centers and trimmed 1,300 jobs at that time, the same number as Tuesday's cut.

The move to outside call centers will be complete by March 25, said Dan Greenfield, vice president for corporate communications. In some call centers, the job cuts will be made gradually, but all Atlanta workers are expected to remain until late March.

Greenfield said approximately 70 percent of all customer calls are already handled by outside vendors, including some overseas.

Call centers in California -- including those at Roseville, Pasadena and San Jose -- will close, as well as one in Harrisburg, Pa. Greenfield said EarthLink plans to take about $36 million in first-quarter charges connected with the move.

"This is a continuation of that strategy, and it's been a success," Greenfield said. "This is allowing us to serve our customers and to be efficient."

Asked if the company worried about customer reaction to the shift to outside call centers, Greenfield said: "It's not a concern. We are very confident that the transition will be seamless."

He said the restructuring will help EarthLink compete in the tough Internet provider market. It will also free up money for marketing, he said.

Employees were notified of the job cuts in a letter from the company's chief executive, Garry Betty, and through individual and group meetings.

Betty said cutting jobs is "the toughest decision that any executive has to make."

"It's entirely driven by efficiency and cost," he said. "We are making hard decisions that are necessary to ensure the ongoing viability of our company."

He noted that it costs twice as much to staff call centers as it does to farm the jobs out. He said the major overseas call centers for EarthLink are operated by firms in Manila, Philippines, and India.

Terminated employees will be able to compete for jobs within EarthLink, Greenfield said, though he doubted that any would be able to move to the outsourcing firms. He declined to be specific about separation packages that will be offered but said it is a "generous benefit package, that will include career counseling."

No savings specifics

Greenfield said specific cost savings amounts for EarthLink will come when it issues its first-quarter earnings figures.

"I'm not getting into specifics on cost savings," he said. "But I will say that the efficiency gained through this plan will allow us to invest in subscriber growth, which also will result in growth of earnings."

The $36 million first-quarter charge was not included in EarthLink's earlier forecast of 2004 net income of between $31 million and $63 million. Greenfield said it would now be accurate to reduce that range by $36 million.

Of the $36 million, $13 million is for employee-related costs, $14 million for lease termination costs and $9 million for non-cash asset write-offs.

EarthLink, the nation's third-largest Internet provider, is set to report fourth-quarter 2003 results on Jan. 29.

Its stock closed Tuesday at $11.05, up 3 cents, on the Nasdaq Stock Market.

[Petronski]

LOL

[BrooklynGOP]

In the future I'll refrain from "ping"'ing him. I'll just "ding-dong".

[familyop]

"How dare he choose a cheaper provider?! Does he realize that he's driving prices down and thus the wages of the american worker!?"

For more information on what our corporates have been doing, take a look at "The condottieri of capitalism," by Vox Day (worldnetdaily).

Why undercut ourselves by helping to enlarge the labor pool for the runaway corporate officers who cooperate with each other?

I'm moving accounts to a provider that costs half of what earthlink costs. That provider and his employees run Unix systems to keep costs down while providing friendlier, more knowledgeable support, know what they're doing and are American all the way. They are outspokenly against outsourcing while making a nice profit. They provide local dialins from just about any locale. But then so are many smaller providers, recently.

The List (list.com) might be a good place for anyone to look.

And, BTW, it's many of our less loyal, less patriotic employers (officers of large corporations) who are pounding our Party to let the flood of immigrants in from the south with quickie, cheap work visas (while family visas continue to be much more time consuming and expensive). But you already knew that, didn't you.

...corporatism, socialism,...same hive in the long run!

[BrooklynGOP]

I'm moving accounts to a provider that costs half of what earthlink costs. That provider and his employees run Unix systems to keep costs down while providing friendlier, more knowledgeable support, know what they're doing and are American all the way. They are outspokenly against outsourcing while making a nice profit.

Who's this provider, if you don't mind me asking?

[Texaggie79]

And, BTW, it's many of our less loyal, less patriotic employers

What crap! Patriotism and loyalty have nothing to do with outsourcing, unless the country they outsource to is an enemy of the US. They are PATRIOTIC for driving our economy and it's ability to acquire more with less resources. God Bless profits.

[Justin Raimondo]

Hey, which one is you? (Ethiopians in Brooklyn?)

[BrooklynGOP]

I don't get it. Must be some kind of a gay pick-up line.

[Texaggie79]

HAHAHAHA HAHAHAHA You're an ethiopian!!!

[Freedom of Speech Wins]

So every company should fire all Americans and lower the costs to the consumers. All operations and production should be done by workers in other countries.

I am sure that products will be in great demand in America, when noone in America, who is an American citizen at least, has a job.

Also where will the tax revenue to support all the programs that the Democrats and Republicans won't cut come from?

[BrooklynGOP]

So every company should fire all Americans and lower the costs to the consumers

The consumer are the ones who are demanding lower costs. People on this very thread bragged about getting better deals from other places. Since consumers are free to choose what they buy (made in america or not), its only fair that companies are free to choose were to spend their money as well. No?

[templar]

The Bush recovery seems to be picking up speed.

[Freedom of Speech Wins]

Maybe the business model isn't sustainable.

I don't use earthlink though or benefit from them hiring people from other countries.

And I or anyone else is free to boycot them.

What are the people who worked for them supposed to do?

Nice payoff for working hard isn't it, getting thrown out on the street!

Why not throw the people at the top out on the same street?

[Xenalyte]

I think it's pronounced "Ethernopian." (That's what Stan and Kyle said.)

[BrooklynGOP]

And I or anyone else is free to boycot them.

Sure. If you can find a better deal you should go for it.

[Texaggie79]

What are the people who worked for them supposed to do?

Be glad they got the jobs they did when they had them. Better than nothing...