Cyber-intelligence staff among nearly 2,000 BAE Systems redundancies

The world’s tenth largest cyber-security consultants have axed 1,900 jobs in the UK, including over 100 in its cyber defence department. The vast bulk of the wide-spread redundancies will come from BAE Systems’ traditional military and defence line, as new CEO Charles Woodburn continues to push the professional services firm toward a streamlined approach and a renewed focus on digital technologies.

Over the course of 2016, British multinational defence, security, and aerospace company BAE Systems saw revenue in security consulting hit 14.2% to $290 million. The group, headquartered in London, was found to be the world’s tenth largest security and cyber-security consulting firm, while appearing to be successfully diversifying into the sector to add to its more traditional portfolio, which includes a number of state and private sector solutions. Despite this success, however, the new Chief Executive of Britain’s biggest defence contractor has announced plans for more than 1,900 redundancies in the UK.

Experts had anticipated that Charles Woodburn, who took the reins at BAE three months ago, would attempt to make expenditure reductions by scaling back on employment. However, the job cuts are double what most had expected. The organisational changes were said to be targeted at delivering the company a more competitive edge, empowering it to renew its focus on technological innovation – a market of growing global significance across all industries – by ‘streamlining’ the organisation via the shaving away of whole layers of management. The job losses will be phased over the coming three year period, and will equate to almost 6% of BAE's 34,600 British workforce.

This new direction is partially motivated by slowing international demand for BAE Systems’ traditional military engineering services. The firm had been hoping for a large Typhoon deal with Saudi Arabia - which ordered 72 of the aircraft 10 years ago. The aircraft cost approximately £4.43 billion, and the full weapons system is expected to cost approximately £10 billion – however in 2010, BAE Systems pleaded guilty to a United States court, to charges of false accounting and making misleading statements in connection with sales to the Saudi regime. Since then, the Typhoon deal has so far failed to materialise, while smaller existing contracts with other Gulf nations are not enough to keep up full production. Subsequently, the largest cuts will hit BAE's factories in Lancashire - where up to 750 jobs will go. Manufacturing in the North-West of England has been haemorrhaging jobs in recent years, seeing 77,000 jobs leave the region since 2006, and the latest news from BAE will further compound that decline.

Following the restructure, which also strips out levels of regional management, the company appears to be moving towards a greater focus on technological innovation. Alongside the redundancies, Woodburn announced the appointment of a Chief Technology Officer to the Board, with former Head of UK Programmes Nigel Whitehead being promoted to the new position. Conflictingly, however, the job cuts also include a number of roles disappearing from BAE systems' cyber-intelligence operations.

“Short-sighted”

With cyber-security at the forefront of business and governmental anxiety, thanks to high-profile attacks on the National Health Service in the UK, and the National Security Association in America – one of the world’s most controversial and powerful state surveillance operations, the segment looks to be a high priority for investment over coming years. Meanwhile, with the world’s biggest cyber-security consultancy Deloitte having been the victim of a hack themselves, the situation seems ripe for competitors such as BAE to siphon off business from the Big Four member. Regardless of this opportunity, the Applied Intelligence unit, which helps companies and governments fight cyber-warfare, will downsize by 150 personnel.

Britain’s largest trade union, Unite, which represents a portion of the BAE workforce, meanwhile pledged to fight what it called a “devastatingly short-sighted” move, while refusing to rule out potential industrial action. Mr Woodburn said BAE would be working “very closely” with the unions over a coming 30-day consultation period, adding, “We believe a good proportion of jobs will be voluntary redundancy.”

GMB, another large general union, meanwhile called for state intervention, with Ross Murdoch, a GMB National Officer, stating, “Given the ever increasing likelihood of no deal on Brexit, GMB calls on the Government to reverse this decision and prioritise this work.”

MPs in Parliament also joined calls for the Government to step in, and prevent job losses, but Business Minister Claire Perry told the House of Commons, "it would be wrong for the Government to interfere in the company's restructuring.”