Absa takes Gijima project in-house

Listed ICT company, Gijima (GIJ), said Monday (March 5, 2012) that as much as 50% of a desktop services contract with its largest private-sector client, Absa (ASA), is being insourced to the group.

The company said it has rendered several outsource services to the bank for the past 10 years, and has delivered in accordance with the relevant contracts.

“A portion (approximately 50%) of the desktop services contract with Absa is being insourced to Absa. The company will continue delivering services on the remainder of this contract,” Gijima said in a statement.

The group said that, of the 200-plus Gijima employees specifically dedicated to working on this contract, a significant number of them will go through a Section 197 process, in terms of the Labour Relations Act, that will see them transferred to Absa – as permanent employees of Absa.

“Gijima will continue working with Absa, and we look forward to tendering for new business with Absa,” it said.

Absa announced last month that it would reshuffle its IT division, with employees asked to reapply for positions within that department.

In an interview with Moneyweb, following the announcement of its results last month, Jonas Bogoshi, CEO of Gijima, said that the group was in the process of an insourcing agreement with Absa.

“We’re always quite clear with them that that’s not a part of business that we are quite profitable on, so they can in-source it. But as they in-source part of the business we’re looking at growing business somewhere else,” he said.

On the size of the Absa contract, Bogoshi told MoneyWeb’s Alec Hogg: “Well, obviously I won’t talk about the exact number, exact value of that Absa contract but you’re right it was well north of R100m. In the current negotiations I don’t see it going below R100m at all.”

On February 21, Gijima highlighted a return to profit, reporting diluted headline earnings per share of 3.11 cents for the six month ended December 2011 after a loss of 28.13 cents a year ago.

Revenue increased by 7.5% to 1.337 billion, with earnings before interest, tax, depreciation and amortisation reflecting an 83.5% at R78.2 million.

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Absa takes Gijima project in-house