RM has announced more than 300 job losses in response to the UK government’s cuts in education budgets and the axing of the Building Schools for the Future (BSF) programme.
Around 325 employees may be affected by the redundancies, as the education IT supplier proposed to reduce the size of its workforce by around 13 percent from the July 2011 level of just under 2,500 people. Redundancies will hit all levels of the organisation, around the world.
“Regrettably, in order to establish RM on a sound platform for the future, the board has concluded that it needs to engage in a consultation process with employees regarding proposed redundancies,” the company said in a trading update.
In last October’s Spending Review, Chancellor George Osborne made a number of cuts to the education budget, including reducing capital spending by 60 percent in real terms. In addition, the Department for Education (DfE) said that it expected to reduce its resource spending budget by three percent by 2014-15.
Furthermore, analyst TechMarketView calculated that the cull of the BSF programme would cause a group of education IT suppliers including RM to lose as much as £3.7 billion in potential revenues.
The programme, worth £45 billion overall with about one-tenth allocated to IT, aimed to overhaul and modernise school building across England.
“Recent reductions in UK public sector expenditure and the termination of the Building Schools for the Future programme have, and will continue to have, an impact on the group in the next few years,” the company said.
As well as the redundancies, RM plans to close a number of offices and to consolidate departments. The company’s executive directors have also decided to waive their bonuses for this year.
It has also proposed sell off a number of its UK operations, including Easytrace, the access control and cashless catering systems part of the AMI business, and classroom furniture business ISIS, both of which were part of RM’s BSF offering.
A spokesperson for RM said: “The market continues to be tough and revenue remains flat for schools. It means making some difficult decisions but we are confident the plans around reorganisation will help see us through the long term. We remain 100 percent committed to education. Today is a difficult day for everybody here.”