O2, U.K. Employee Union Reach Outsourcing Deal

What had been shaping up for an ugly confrontation between staff and O2, the U.K. mobile brand of Spanish telco Telefonica, seems to be resolved.

In May, the company had announced a 10-year, £1.2 billion ($1.8 billion) outsourcing deal with Capita. A key driver for the deal, claimed O2, was a drop in need for physical call center operators to help customers, as smartphone customers tended to prefer online assistance more than feature phone users.

However, that deal immediately become highly controversial in the U.K. over leaked plans that suggested many staff would be either fired or their jobs offshored -- and, worse, that the business driver was not any real change in customer behavior, as first explained, but more a desire to cut costs. This was typified for many in the British press, which has been writing about the row, about "contact deflection" -- the deliberate pushing of customer support issues to the Web or India to save money.

Call center staff protested -- a campaign that got some sympathy with observers as many of the centers are based in areas outside London where alternative employment opportunities are being crunched by the ongoing recession in Britain.

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But now the union representing their cause, while still not that happy with the employer's unchanging commitment to outsource, says it's reached a good settlement with both O2 and Capita.

The Communication Workers Union, (CWU) announced Tuesday an "eleventh hour deal" that cancels a planned ballot for industrial action. And, observers of offshoring confrontations may be interested to learn that the union is adamant it was only the threat of strike action that brought the two back to the negotiating table.

The union claims the agreement, reached after "intense negotiations sparked by [our] strike ballot," is a step forward for the affected staff. It says the agreement includes far better protection and terms and conditions than previously -- and that it "definitely focused the minds" of the firms.

Under the settlement, staff transferring to Capita will not see salaries dip, will still be eligible for promotion and pay increases as per their former contracts, plus will have their pensions protected, said the CWU.

CWU assistant secretary Sally Bridge, the lead union representative in the talks, added, "We believe we have made considerable progress in seeking assurances and employment protections."

That being said, the group makes its dislike of the ongoing O2 deal with supplier Capita evident: "We don't agree with the principle of outsourcing jobs," CWU deputy general secretary Andy Kerr said, adding that "clearly neither do many O2 workers," as 1,000 have chosen voluntary severance, rather than work for Capita, since the deal was announced in May.

Kerr claims the standoff between his members and O2 was made more problematic by the way in which O2 "behaved," with rumors of outsourcing rife and "mixed messages" from the company.

Meetings with staff will take place at affected O2 call centers across the U.K. over the next week to explain the agreement to employees, consult members and get feedback.

Capita has stated there are no "foreseeable" plans to downsize or close any sites, plus it won't "deliberately" run down a site so it can be offshored.

Plus, if an outsourced O2 support site is shuttered, the outsourcer is now committed to redeploying all staff locally, with no more than 45 minutes additional travel time for any workers.