AT&T Bets On Automation

AT&T, the nation's largest long-distance company, contends that the IT systems it has built in recent years will allow it to shed more than 12,000 jobs this year while writing down more than $11 billion in assets, all without hurting its network or the services it offers businesses.

"We've been investing heavily in terms of automation, so our costs will go down and our quality, performance, and reliability will go up," says Hossein Eslambolchi, AT&T's tech czar who serves as the company's CIO and chief technology officer.

Customers may "get a little worried" when they hear about massive layoffs at AT&T, Eslambolchi says, but there's no cause for alarm. "My expectation is that customers will see better performance," he says.

Automated systems now let AT&T's business customers place orders, set up circuits and services, troubleshoot problems, and make changes to network services without dealing with AT&T employees. "Seventy-five percent of all our switched-circuit orders flow through a global integrated-management system without human intervention," Eslambolchi says. "That has reduced order-cycle time by 75%, and the head count supporting those switched orders has been reduced by 86% in the past two years."

In other areas, computers automatically process 20,000 orders a month for permanent virtual circuits and handle up to 15% of all frame relay orders. "Automation has helped us reduce the workforce in that area by 40% and reduce cycle time by 50%," Eslambolchi says.

AT&T's Business Direct portal uses XML to provide customers with access to AT&T systems. It handles 25 million transactions annually and eliminates 25 million calls, E-mails, faxes, and manual entry of data into AT&T systems. It also saves AT&T an average of $15 per transaction, Eslambolchi says. The company supports 600,000 users on that platform.

AT&T, once the nation's largest employer, had previously said it would cut about 5,000 jobs this year. It now plans to shrink its workforce by about 20%, or 12,500 jobs, bringing its total number of employees to fewer than 50,000. Around three-quarters of those losing their jobs have already been laid off or notified.

The downsizing comes as AT&T retreats from the consumer market, confronts competitive challenges brought about by new technologies, and deals with losses in the regulatory arena. Those include changes that affect the rates it pays to use access lines from local phone companies to provide services to customers, especially residential ones. AT&T blames "sustained pricing pressure" and the shift to new network technologies in the business market, such as IP networking, for the workforce reductions and asset write-off.

"AT&T is in a brutal market, and they have to get smaller on a cost basis because their revenues are declining so rapidly," says David Willis, VP of technology research at Meta Group. "Cutting costs by automation and customer self-service is the way to go. The question is how fast can AT&T do it."

AT&T expects its net debt to be less than $7 billion by year's end, almost half what it was two years ago.