Absa is Gijima’s largest private-sector client, with several outsource services rendered to Absa for the past 10 years.
“The desktop services contract with Absa is not coming to an end; however a portion (over 50%) of it is being insourced. Accordingly Gijima will continue delivering on the remainder of this contract,” it said.
Of the 200-plus Gijima employees specifically dedicated to working on the contract, a significant number of them will go through a Section 197 process that will see them transferred to Absa, as permanent employees of the bank, the IT firm noted.
Absa announced last month that it would reshuffle its IT division, with employees asked to reapply for positions within that department.
“Through developments in technology and processes, we continuously seek to improve output while reducing duplication. As part of this drive, Absa can confirm its decision to in-source its desktop support services, which will be effective from April 2012. The function has previously been outsourced to Gijima,” the group told BusinessTech.
“It is must be noted that Absa will continue to maintain business relationship with Gijima on other contracts,” it said.
The IT group said it is not in a retrenchment phase, “nor has the company embarked on any large-scale retrenchment drive in the past 12 months. Jobs lost in that period have been lost on account of aligning the business to the needs of our clients. We still employ over 3,500 employees”.
“Gijima will continue working with Absa, and we look forward to tendering for new business with Absa,” it said.
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.