PCCW starts contractor scheme

By Alex Frew McMillan

Li has seen staff roles slashed by 20 percent since the takeover of Cable & Wireless HKT

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HONG KONG, China (CNN) -- Telecom company PCCW says 1,550 workers have opted to leave the company and become contractors.

The company offered workers the chance to leave the company two months ago, to work as contractors.

The 1,550 tally was higher than the company's own target of 1,000 workers. They officially leave their company roles on November 8.

The freelancers will create 17 independent companies that will have guaranteed levels of contracts from PCCW for three years.

PCCW, headed by Richard Li, son of tycoon Li Ka-shing, made the move to cut costs and bring its total headcount down to below 12,000.

The company will guarantee the workers 100 percent of their current workload for the first year, at least 80 percent in the second and 60 percent in the third.

Savings to start from second year

The contracts will be worth $378 million ($48.5 million) in the first year, roughly what the company would have paid the workers as full-time employees. But PCCW expects savings to start in the second year.

The employees work in areas such as servicing pay phones, maintaining the outside of plants and servicing phone-exchange centers.

PCCW took over Cable & Wireless Hong Kong Telecom, the dominant fixed-line phone company in Hong Kong, in 2000.

It has trimmed its work force by about 20 percent, down from 15,000, in a series of layoffs. The company is increasingly dependent on its phone operations and cut its loss-making pay-television service in July. (Full story)

PCCW was the darling of the stock market during the dot.com boom due to its move into Internet services. But the once-high flying stock has crashed to earth.

It is down 2.48 percent at the Tuesday lunch break in Hong Kong at HK$1.18, slightly below a 1.05 percent fall in the Hang Seng.

But the stock is up 34 percent since sinking into penny-stock territory and hitting a low of HK$0.88 in early October.

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