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Bartlett takes control as Orcon merged into Kordia NZ

Restructure at state-owned enterprise sees Orcon CEO Scott Bartlett take control of new Kordia NZ division; 50 jobs sent to Manila. UPDATED with comment by Kordia Group CEO Geoff Hunt.

Chris Keall
Fri, 26 Oct 2012

Belying industry speculation it would sell Orcon (its only retail division), Kordia has instead brought it closer.

Orcon iis being merged with the business communications-focussed Kordia Networks.

The new division will be known as Kordia New Zealand, and be headed by Orcon CEO Scott Bartlett.

Geoff Hunt remains in overall control as CEO of Kordia Group.

State-owned Kordia as a whole has 1400 staff and made a $12.1 million profit on revenue that increased 35% to $399 million in the year to June 30 - largely on the back of the fast-growing Kordia Solutions Australia.

Profit was not broken out by business unit.

The new Kordia NZ unit (Kordia Networks plus Orcon) will have an annual turnover of $161 million and account for 320 staff.

Jobs offshored
The merger will save costs on duplicated network infrastucture and support staff, Kordia says.

Over the next four months 50 Orcon call centre jobs will go, outsourced to a Datacom operation in Manila.

Ironically, the news came on the heels of Prime Minister John Key's co-announcement, with visiting Filipino President Benigno Aquino, that the Philippines will grant work visas to 100 young New Zealanders a year (and 100 Filipinos the chance to work in NZ).

Focus on producs and services
Mr Hunt told NBR that, simply, "Datacom do call centres better than us."

A pilot outsourcing programme earlier this year had gone well. Some Orcon calls have been handled from the Philipinnes for more than nine months.

"Call centres take a lot of energy," Mr Hunt said. Kordia was good at engineering and product development, and wanted to focus on those areas.

Qualms over sending jobs offshore?
Mr Bartlett speculates that "many affected call centre staff could find jobs at Australia’s second largest DSL broadband provider, iiNet, which operates a call centre in Auckland."

Mr Hunt said they were "good people with good skills." Kordia was proactively helping them to find work, both with iiNet and two other options. He was confident they would find work.

Labour ICT spokewsoman Clare Curran disagreed, saying Kordia had just sent another 50 Kiwis to the dole queue. "This is the same short term thinking that’s seen 220 jobs lost today from SOE Solid Energy. That’s 270 jobs culled from SOEs today. National has removed the social responsibility clause which ensures SOEs have to take into account community interests and this is the result."

Did Mr Hunt have qualms about sending jobs offshore?

No, he told NBR. His focus was on creating  as strong company to provide certainty for staff and clients and "an appropriate return for our shareholders" (notionally, Finance Minister Bill English holds 50% of Kordia Group's shares, SOE Minister Tony Ryall the other half).

Back in black
In August, Kordia revealed a swing back to profit on a 35% surge in revenue.

Although Orcon (27%) and Kordia Networks (14%) grew strongly, the biggest driver was Kordia Solutions, the telecommunications consulting and contracting arm - particularly across the Tasman where it grew 58% on the back of the resources boom.

Kordia NZ's focus
Mr Hunt told NBR that within the new Kordia NZ division, Orcon's focus would be on the home and small business markets.

The wider Kordia NZ would focus on bigger business customers.

Those include Sky TV, whose content delivery network (CDN) used to deliver its iSky on-demand content, is managed by Kordia Networks.

Where there was crossover among Orcon and Kordia Networks business clients, particularly in the area of wide area network (WAN) services, the customer would shift from an Orcon-branded service to the broader Kordia NZ brand and "OnKor" services.

Kordia's partnership with Microsoft to push its Lync product (which unifies voice, email and other communications into a single system) will also fall under Mr Barlett's Kordia NZ domain. 

The SOE's new IP networking service aimed at interconnecting regional fibre companies involved in the $1.35 billion Ultrafast Broadband (UFB) rollou will also come under Kordia NZ.

Chris Keall
Fri, 26 Oct 2012
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Bartlett takes control as Orcon merged into Kordia NZ