“I made it,” exclaimed the MCI employee at its massive networking facility in Cary. Unfortunately for many others, the news wasn’t nearly as good.
Although MCI officials declined comment, sources told Local Tech Wire that scores — if not hundreds — of people were sent packing today. One employee said 20 percent of the local work force of some 2,600 people, or more than 500, went home early. Another described the number as “pretty significant”.
Two employees also told Local Tech Wire that MCI has instructed employees not to talk to the press. If they do, they will be fired, the sources said.
The massive layoffs are part of the reeling company’s plans to trim 17,000 jobs in order to save $900 million annually.
And the layoffs in Cary are significant, given that it is a principal control point for MCI’s massive worldwide network. Its data traffic and control of much of the Internet backbone business are considered two of MCI’s crown jewels.
A third source, who says he already made travel plans in anticipation of losing his job, confirmed there were cuts but declined to provide an estimate on how many people lost their jobs.
“Today was like going to a funeral,” the source said. “Only no one knew who was going to go down.”
Several employees were notified in advance that they wouldn’t lost their jobs during a round of cuts last April that resulted in about 100 North Carolina workers losing their jobs. This time, according to the source, that didn’t happen.
An internal WorldCom memo obtained by Local Tech Wire indicated the company-wide cutbacks would come in the form of 2,000 contractors, 3,000 from back office services for residential and long distance customers, 5,000 from arms of the company it is ejecting, such as its wireless unit, with the remainder coming from back office functions and attrition.
The memo also said the company plans to begin selling off its assets in an attempt to raise capital to pay down some of the $2.65 billion in debt it owes its banking creditors, which comes due June 2003. WorldCom incurred much of that debt when it went on a buying spree during the height of the telecom craze.
Local service providers eyeing WorldCom assets
Rich Lee, chief executive officer of Cary-based Springboard Managed Hosting, said Internet and voice service providers are beginning to poke through WorldCom’s equipment to see what they can affordably bring online with their own networks.
“There is a lot of infrastructure out there and only about 20 percent of it is being utilized,” Lee said. “Until things start filling up again there is a lot of equipment out there being offered at fire-sale prices.”
Dana Tardelli, a telecom analyst with the Boston-based Aberdeen Group, said the incumbent service providers, such as BellSouth, AT&T and Sprint, are ready to swoop in and snatch up WorldCom’s customers.
“A lot of people say it’d be like dancing on their grave but this is business,” Tardelli said. “If your competition is down you kick them. You can be sure there is some major account analysis being done by every ILEC right now.”
Aaron Cowell, president and chief operating officer of Charlotte-based US LEC, said his company is already cautiously pursuing WorldCom customers.
“We have heard from business customers who are concerned about staying with WorldCom, and we’ve already signed a few,” Cowell said. “It’s going to take some time for these recent events to filter out to their base of customers but we certainly are encouraging people to switch, and we’re certainly encouraging our sales force to provide people with as much information as they can.”
Kim Chapman, president of Raleigh-based Network Services, a telecom-consulting firm, said none of her clients are unplugging their WorldCom connections just yet – but she is sure that will change.
“I think the real issue is that all carriers out there use WorldCom facilities at one point or another in routing their traffic over the network,” Chapman says. “I’m wondering how that might affect future communications for businesses.”
Cowell said US LEC uses WorldCom facilities mostly to terminate long-distance calls and in passing traffic between both companies’s networks but that US LEC keeps three vendors on every switch to ensure that if there is a problem with one vendor that service will not be shut down. He said other carriers do the same.
“At this point there is plenty of time for us to make sure our network is ready to move if there is an issue with WorldCom services,” Cowell said.