CenturyLink Plans Layoffs, Partners Hope Recent Emphasis On Channel Continues

After months of grappling with declining revenue in its legacy voice services, CenturyLink revealed plans to slash its staff by as much as 8 percent, a move that could impact more than 3,000 employees.

In a memo issued to employees Wednesday, CenturyLink CEO Glenn Post said that sinking legacy revenue has resulted in a loss of $600 million a year for the company. As a result, CenturyLink would need to reduce its staff of about 43,000 global employees by laying off about 3,500.

As the Monroe, La.- based telecom moves through its restructuring process, partners are seeing CenturyLink place more emphasis on the channel.

[Related: Q&A: CenturyLink Exec On ISVs, Federal Customers And Getting Specific With Channel Support]

"Less resources in the legacy telecom side, or maybe on the direct sales side, could mean more reliance on the channel," said one solution provider and CenturyLink partner who requested anonymity. "The channel is the most progressive vehicle that CenturyLink has to help it compete."

CenturyLink has been pushing hard into the networking and cloud markets, but despite growth in these newer, strategic business services, it's still not enough to make up for the declines in its landline phone business, a core competency of the carrier, Post explained.

"While I am very confident that we will continue to accelerate our revenue growth over time, I also have reached the very difficult conclusion that the loss of higher-margin legacy revenue requires that, in addition to achieving our growth targets, we must also significantly realign our fundamental cost structure," Post said in the memo. "It is a difficult conclusion to reach, but our long-term success requires us to adapt to the reality of the rapidly changing environment in which we are operating."

In an email to CRN, a CenturyLink spokesperson said that the layoffs will not focus on any specific group of employees and that the positions impacted will be based on the number of employees who choose to voluntarily leave the company with a severance package over the next few weeks.

"We are making adjustments to meet the needs of the business," the spokesperson said. "We do not have specific numbers at this time."

Unlike some competing incumbent carriers, such as AT&T and Verizon, CenturyLink doesn't have a wireless voice business that could help offset legacy voice declines, according to Michael Bremmer, CEO of TelecomQuotes.com, a telecom consultancy based in Moreno Valley, Calif.

Bremmer said that the proposed layoffs aren't surprising. "Wireless is a better product and getting better all the time, so [carriers] need less people to sell the wireline. Unless you can create value in the [IT/telecom industry], you won't have a job in 10 years," he said.

CenturyLink has been on a hiring spree within its indirect sales business unit. Since the departure of channel chief Blake Wetzel in May, the company has hired several new executives and added new positions to its channel business unit. CenturyLink brought on Bill Corbin as senior vice president, strategic partnerships and channel operations in May. John DeLozier, vice president of Channel Alliances was hired in July, as well as Gahn Lane, vice president, ISV and federal channels.

The recent additions on the indirect sales side have partners believing that CenturyLink plans to double down on its channel efforts, rather that detract from these resources.

The solution provider executive said that by shedding some of its staff and making strategic hires down the road, CenturyLink could be trying to build a new culture around supporting emerging technologies, such as cloud, rather than legacy voice and networking services.

"CenturyLink is a really good network services provider, but these kinds of companies are having trouble getting into the cloud, and CenturyLink's corporate culture isn't what I would call 'agile,'" the partner said. "I think the layoffs reflect that – they are finding it very hard to compete in the cloud space, so I think they are trying to transform themselves and keep pace in the market."

Ted Schuman, CEO of PlanetOne Communications, a master agent and CenturyLink Premier Elite partner, agreed with the anonymous solution provider executive in that the new channel leadership team that CenturyLink recently put in place has been a breath of fresh air.

"CenturyLink appears to aggressively be strengthening their channel programs with key partners, and the new channel team is quite welcome because they have a completely new approach to going out and conquering the channel," Schuman said.