Struggling Telstra subsidiary Sensis will make up to 120 staff redundant nationally following a disastrous profit result on Monday that has left the directories business reeling.

Struggling Telstra subsidiary Sensis will make up to 120 staff redundant nationally following a disastrous profit result on Monday that has left the directories business reeling.

Crikey can reveal the company, which is yet to formally announce or tell staff of the layoffs, will offer some redeployment within Telstra. But many will go from a hit list of 30-40 employees in face-to-face sales, with the remaining layoffs to be drawn from administration, marketing, HR and finance offices in Melbourne and Sydney.

And the impact could spread further, with potentially hundreds of additional contractors and agency staff — who work for less money than their Telstra counterparts despite being full-time — due to be hived off after the news is made official this afternoon. The process is expected to take three months.

“Honestly, most people still don’t know about it, they’ve just informed the two unions and Centrelink,” one employee told Crikey.

They said that after the news began to percolate, staff would be crestfallen: “I didn’t see it coming, I course I’m disappointed at the communication strategy. The real thing is that these jobs are going and they shouldn’t be. They’re a very profitable company and this is an extremely disappointing decision.”

Last week Sensis saw earnings tumble 32.1% to $288 million for the second half of 2010, with the result 15% lower on an adjusted basis.

The company is shifting its operations to telesales and outbound call centres, rather than employing staff to visit businesses in person. In another instance, a whole night-shift team will be told their services are no longer required.

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Sensis employs about 3000 full-time staff around the country, with a further 1000 drawn from agency and labor hire firms.

A spokesperson for the Community and Public Sector Union confirmed the 120 figure: “It’s pretty disappointing news for the people involved and we’re providing advice and support for people affected by it.

“It’s a result of structural change in that industry. The online business is expanding at a much more rapid pace than the print. The relatively good news is that Sensis is offering redeployment, even though there’s no guarantee all staff will keep their jobs.”

In addition to the declining directories business, Sensis insiders cite bad management decisions for the meltdown, from the increasing use of agency staff to the implementation of the disastrous Igen database system.

Sensis’ General Manager of Corporate Affairs, Prue Deniz, said: “Our long-term growth strategy is evolving, to align with the way the Australian businesses are supporting our products and services and the way consumers are searching for local business information. We’ve been working on this strategy for some time now. Print still remains a core factor of our business.”

Deniz denies agency and contract staff are at risk.

Others disagree with Sensis’ rosy outlook. The company has “run into a brick wall”, as The Australian’s respected business columnist John Durie said last week, largely on the back of its unwanted hard copy directories. As Telstra admitted last week: “The reduction in performance on an adjusted basis is mainly due to the reduction in the revenue from traditional Yellow Pages print product.”

Yellow Pages accounts for more than half of Sensis revenue but sustained an 18% drop in earnings. And the losses aren’t being gained on the digital side — online sales were up just 0.2%. Sensis boss Bruce Akhurst is due to brief the market on future plans in the coming weeks.

Crikey understands a proportion of Sensis’ advertising strategy focuses on a “fear of loss” threat in which businesses are told they’re at serious risk if they fail to purchase an ad in the Yellow Pages. A similar approach has also been used in many of the company’s advertising strategies, which depict ad-less companies falling off the face of the earth.