Telstra to cull 10,000 contractors

Telstra is set to cut back its contractor workforce by 10,000 - or a quarter - over the next two years.

The telco announced plans to reduce the size of its “indirect workforce” at its half-year results in February.

However the quantum of that reduction was unknown until a speech today by CEO Andy Penn to a Morgan Stanley Summit.

"Over the past year we have also reduced our indirect workforce by 5000 and we would anticipate reducing this further by over 25 percent in the next two years," Penn said.

Penn’s comments were first reported by the Australian Financial Review, and iTnews confirmed the 10,000 reduction number is accurate.

Telstra said back in February that its indirect or contractor workforce included personnel from tech vendors, consultancies and outsourcing providers. It estimated they numbered around 40,000.

“As we simplify our business and optimise costs, we expect the number of people our partners employ to work on our business to decline,” it said at the time.

“The indirect workforce is also expected to decline as a proportion of our overall workforce.”

The start of cuts to the contract workforce come as Telstra increases the pace of cuts to its permanent staff.

The telco last week said it would bring forward 6000 of a planned 9500 cuts to permanent staff by six months.

"By June 30 we expect to have announced around 75 percent of our direct workforce reductions," Penn said today.

"The human dimension of these numbers is very challenging. That is why we have an extensive program of support in place."

The reductions across Telstra are part of a strategy called T22, which aims to reorganise and refocus the telco, simplifying its operations and product offerings.