IT services provider Malam Team Ltd. (TASE: MLTM) has announced the departure of two top executives as part of a company restructuring: Team Netcom CEO Hayim Mizrahi, who has been with the company for 30 years; and Malam Systems CEO Yoseph Galezer.
The massive restructuring, which began in late 2012, is now reaching its peak, with the departure of 20-30 mid-level managers. Malam Team is consolidating the hardware and computer infrastructures activities at its subsidiaries, and outsourcing activity. The company is creating a new division, which it says will have NIS 900 million in annual sales. Udi Weintraub, the CEO of Malam Team subsidiary Omnitech Ltd. will run the new division.
Since January, Malam Team has fired a tenth of its workforce, about 300 employees and managers. Most of the layoffs are due to the completion of software development projects and the failure to win new ones.
Malam Team controlling shareholder and CEO Shlomo Eisenberg said today, "What we're doing now is to adjust management to this streamlining. This is an unprecedented change in the industry, and it was forced on us. I think that everyone in the industry should tighten their belts and prepare for the coming changes, because there is a lot of uncertainty.
"It was impossible to do what we're doing now a year ago, and certainly not two years ago. This is the end of a process which began at the bottom, ending a long chapter of adapting the structure and size to reality, with assessments about what will happen tomorrow. I hope we'll see the benefits in 2014."
Malam Team has already undergone several rounds of executive departures since Malam and Team merged in 2007. Six years after the merger, the company's share price has been halved, and it is traded at a market cap of NIS 147 million.
The current change at Malam Team, one of the biggest companies in the business, comes amid uncertainty in the computer services industry in general, and in the Israeli computer services industry in particular. After just 3% growth in 2012, no growth, or negligible growth at best, in companies' IT budgets is seen in 2013.
This will probably result in a wave of cutbacks, including layoffs, among IT services companies, and industry consolidation. The computer services industry is also changing, with remote server farms providing computer resources once provided by local services vendors.
Published by Globes [online], Israel business news - www.globes-online.com - on December 3, 2013
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