BT Global Services to cut costs

A profit warning from BT Global Services, the arm of the company responsible for delivering key NHS IT contracts, has sent shares in the telecoms giant crashing to a 20-year low.

While other divisions performed as expected, BT Global Services was said to be a “dissapointing” £120m behind expectations. 

BT’s chief executive Ian Livingston promised to bring forward cost savings in Global Services, which is expected to lead to job losses.

“BT is performing in line with or ahead of expectations in all but one of its divisions, so the results in BT Global Services are particularly disappointing,” he said in a statement.

BT Global Services is responsible for some of the highest profile projects in the UK – including the three National Programme for IT in the NHS contracts BT holds. These are to deliver the NHS Spine, the broadband network N3, and to act as local service provider for London. Combined, these contracts are worth approximately £3 billion.

“We acknowledge that the performance in this part of the group is unsatisfactory and are committed to taking decisive action to rectify the situation,” said Livingston. He said that execution of cost saving initiatives would be speeded up.

The company said the problems with global services were linked to “operational failures” and not the wider financial turmoil. BT said the boss of the Global Services division, Francois Barrault, has resigned.

Profits fell because of ”slower than anticipated delivery of efficiency savings and the continued decline in higher margin UK business.” BT will report its second quarter results in full on 13 November.