EarthLink Inc. is cutting another 1,300 jobs, or 40 percent of its work force, and outsourcing the work of some of its call centers to other companies as part of a major restructuring that started a year ago.
The nation’s third-largest Internet service provider said Tuesday it will close its call centers in Harrisburg, Pa., Roseville, Calif., San Jose, Calif., and Pasadena, Calif., and reduce its call center operations in Atlanta by the end of the first quarter of 2004.
About 1,300 of the Atlanta-based company’s 3,300 employees will lose their jobs, spokesman Dan Greenfield said.
The cuts are on top of 1,300 jobs EarthLink shed in January 2003, meaning the company will have reduced its work force by 60 percent in a year. Attrition also was a part in the reduction.
In both rounds of cuts, EarthLink cited increased competition. EarthLink remains behind America Online and MSN in market share among Internet service providers. It has roughly 5 million paying subscribers, the company said.
“The assumption that we are doing this because business is bad is not a good assumption to make,” Greenfield said. “The issue is not because of slower sales. The issue is improving operational efficiencies and trying to become profitable in a highly competitive, dynamic marketplace.”
EarthLink said Tuesday customer support functions will be routed to its remaining Atlanta staff and to outsourced contact center providers. Currently, more than 70 percent of the company’s calls are outsourced, many dealing with billing, tech support and sales.
EarthLink expects to record charges related to the cuts of about $36 million in the first quarter. These costs include about $13 million for employee-related costs, $14 million for lease termination costs, and $9 million for non-cash asset write-offs.
These costs are not included in EarthLink’s previously stated expectations for 2004 net income of $31 million to $63 million, and EarthLink will reduce expectations for net income accordingly, the company said.
EarthLink is set to report fourth quarter 2003 results on Jan. 29.