Verizon Communications Inc. VZ plans to close seven call centers across five states that may lead to job loss of 3200 employees. The company deems the decision as a difficult but necessary one. Verizon intends to realign its real estate assets and customer service operations to make the optimum use of its call centers in other locations. The call centers to be closed are located in California, Connecticut, Maine, Nebraska and New York. Interestingly, Verizon is going through an internal restructuring process and has recently made cutbacks in its retail operations.
The affected employees will be offered jobs in Florida, Texas or South Carolina along with reimbursement of relocation costs to the tune of $10000. Workers not opting for a move will be offered severance packages. The job cutting has been criticized by the Communication Workers Association of America (CWA) which has also raised a hue and cry about Verizon’s methods of increasing outsourcing and off-shoring jobs. Earlier this year, the CWA backed the strike by Verizon’s wireline workforce. Meanwhile, in the latest call center retrenchment, the employees are mostly non-unionized.
The Bottom Line
The competition in the U.S. wireless market is expected to further intensify in the coming years with the entry of cable players like Comcast Corp. CMCSA and Charter Communications Inc. CHTR. Moreover, AT&T Inc. T is leaving no stone unturned to catch to gain a leading position as a wireless player in the U.S. This is sure to weigh on Verizon’s margins. Hence, the company is on the lookout for cost-reduction measures.
Verizon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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