A Ground-breaking Partnership

Telkom Case Study

TFMC was created in July 2000 as the result of a joint venture between WS Atkins from the UK and Rebserve, a South African services group. The aim of the joint venture was to provide facilities management to Telkom, South Africa's only fixed line operator, at the time.

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Project Title: Telkom Facilities Management Services
Client: Telkom
Location: South Africa
Project Value: R2.7 billion

Project Description:
TFMC was created in July 2000 as the result of a joint venture between WS Atkins from the UK and Rebserve, a South African services group. The aim of the joint venture was to provide facilities management to Telkom, South Africa’s only fixed line operator, at the time. Telkom wanted to outsource its total facilities management services, allowing it to focus on its core business, with improved services and cost savings in this area being provided simultaneously.

The final agreement was a full facilities management outsourcing contract with a value of in excess of R1.5 billion and a total contract value over 10 years of about R15 billion. The targeted savings after the first three years was R300m and subsequent targeted savings are estimated to be R220m p.a.

As part of the outsourcing agreement, approximately 1900 people, 675 vehicles and 600 cell phones were transferred from Telkom to TFMC with a no-retrenchment clause that was valid for two years. The outsourcing contract was considered to be ground-breaking, with the "agree-to-agree" principle a key.

TFMC faced a stern challenge. Firstly, the timelines were extremely tight. TFMC had 3 months to set up the company, and all transfers had to be completed within 7 months of signing the contract.

Some of the other challenges TFMC faced were:

• Two very different cultures were to be combined into one, with a monopolistic, semi-government culture and attitude that needed to be transformed into a commercially- driven culture focused on delighting the customer.
• IT structures and systems had to be combined and in many cases established from scratch.
• Management information systems were almost non-existent and very little management information was available.
• Financial systems, payroll management, management structures, a call centre, corporate office accommodation, and many other issues relating to running a multi-million rand company, had to be put into place in record time.

Some achievements to date:

• Seamless, trouble-free transition with no disruption thereafter.
• Total permanent and temporary staff headcount reduced by 8%, operational costs reduced by 25.72% (target was 12.25%).
• Property occupation - reduced through space optimisation by 7%, leases reduced by 21%.
• Improved customer satisfaction by 17%.
• Achieved ISO9001:2000, ISO14001:2004 and OHSAS18001:1999 accreditation.
• No retrenchment of permanent staff.
• Set up more than 90 job creation schemes resulting in 2500 job opportunities.
• Developed an integrated performance management system.
• Established a sophisticated building control centre for remote monitoring of critical sites.

Value-Added Achievements

• Established a competitive, world-class FM company.
• Ensured sustained profit levels for shareholders.
• Demonstrated savings provided over three-year time span.