Thomson Reuters to axe 12% of workforce

According the reports, Thomson Reuters is in the process of cutting 3,200 jobs or 12 per cent of its workforce, to scale down costs over the next two years. 

The news and information company made the announcement at its annual investor day conference in Toronto.

Background 

Thomson Reuters Corporation is a Canadian multinational mass media and information firm. The firm was founded in Toronto, Ontario and Canada. The company was founded by Roy Thomson in 1934 in Ontario as the publisher of The Timmins Daily Press. Thomson Reuters was created by the Thomson Corporation's purchase of the British company Reuters Group in April 2008, and is majority owned by The Woodbridge Company, a holding company for the Thomson family. 

Thomson Reuters was ranked as Canada's "leading corporate brand" in the 2010, Inter-brand Best Canadian Brands ranking. Thomson Reuters operates in more than 100 countries, and has more than 45,000 employees. Last month, it reorganised its European news bureaus, laying off journalists in France, Germany and Italy. Thomson Reuters is also one of the world's largest news services, ahead of The Associated Press and Agence France-Presse, but its news operations account for only six percent of the company's total revenues.

Analysis 

The news and information company is drastically shrinking its staff, cutting 3,200 jobs and closing 55 offices by 2020. Reuters says it will employ roughly 23,800 people -- down from its current workforce of 27,000. Executives at Thomson Reuters says the move is part of a larger plan to further reduce the company's expenses over the next two years.

Jim Smith, Chief Executive Officer, said “We’re going to simplify the company in every way that we can, working on sales effectiveness and on ways to make it easier both for our customers to do business with us and for our frontline troops to navigate inside the organisation.” 

Reuters also plans to reduce its number of offices around the world 30 per cent to 133 locations by 2020. Following the Blackstone deal, about 43 percent of Thomson Reuters revenues come from its legal business, with 23 percent of sales coming from corporate clients and 15 percent of sales coming from its tax business.

This overhaul came after the company sold 55% of their controlling stakes in its lucrative trading and data business to Blackstone for $17bn in January. That business — now known as Refinitiv — made up more than half of the company's sales. Shares in Thomson Reuters have risen by 40 percent since May, benefiting from the company buying back $10 billion worth of shares.

The corporate division, which included the news service, ran at an operating loss of about $253m in 2017, according to Thomson Reuters’ annual report. As part of its purchase, Blackstone agreed to pay Reuters News a minimum of $325m a year for 30 years. After the Blackstone deal, Thomson Reuters executives said they were looking to expand businesses serving the legal, tax and accounting communities, investing $2bn in those units, which now make up more than 80 per cent of revenues for the remaining company. 

The company also aims to grow annual sales by 3.5 percent to 4.5 percent by 2020, excluding the impact of any acquisitions. According to chief executive officer Jim Smith, the company plans to cross-sell more products to existing customers along with attracting new customers. The company will also cut the number of products it sells, he said.

Assessment 

Our assessment is that the Thomson Reuter’s actions are indicative of a trend towards decreased reliance on manual labour. We believe that the transition towards automation will result in job loss, similar to the crisis that resulted from the mechanisation of factory jobs. In the information industry, AI and machine learning are already driving innovations and transformation. 

We also feel that the objective behind this job layoff is to reduce the capital expenditure to 7% of revenue from a current of 10% by 2020. Research, discovery and investigation represent a significant portion of what employees do. These are complex and time-consuming tasks making them easy contenders for simplification, automation and machine assistance.