Madrid-based Eritel SA, Spain’s number one software company and part of the Indra Group, has been slipping in recent years (1991 turnover: $130.7m; 1992: $113.6m; 1993: $98.6m). The company has been criticised for losing its way in a bureaucratic labyrinth and becoming distant from the customer. Eritel underwent a phase of restructuring in 1993, with management team changes, the signing of the first general wages agreement since the merger of Eritel and Eria, and the loss of 100 workers, bringing numbers down to 1,700. The managing director Josep Maria Vila, recently elaborated on the reorganisational activities, declaring that a greater emphasis would now be placed on the marketing of its products. Up to now, marketing had been playing second fiddle to the design and development of systems and considerable investment in research and development, he added. The old structure, based on production, development and technology units is to give way to commercial units focusing on different markets. We have defined the market, and now we will concentrate our activities on a number of accounts, while applying clearly-defined strategies, declared Vila. Eritel’s main customers have been Telefonica de Espana SA, the National Institute of Industry and public services. Vila blames the recent fall in revenue on cuts in government spending after last summer’s general elections and a drop in orders from Telefonica. Nevertheless, the company has grown 12% in the industrial sector and 8% in engineering and systems integration.
Lay off
Vila said that the company now wishes to concentrate more on value-added business and worry less about turnover volume. Eritel is still hoping to balance losses of $7.0m in 1992, but on the positive side, the company drew $3.9m from its recent exit from Ibermaica, and Vila does not reject the possibility of alliances with other companies, citing current collaborations with Computervision Espana SA on its Global System 9, and with Telefonica on its Atlas project. Eritel also has a technology agreement with the Canadian company OSIware Ltd. It now seems the firm is looking to lay off another 197 workers before March 31, which, it claims, would make the difference between finishing the 1994 tax year with losses of $12.0m or operating profit of $4.6m. The jobs to go will affect software and consultancy professionals and systems technicians. Eritel has recently been maintaining a high European profile, with $3.5m from European projects relating to areas such as neural networks and communication systems over the past year. Last December the European Community gave Eritel a $350,000 contract to develop an electronic mail system to link Brussels (Ministry of Overseas Affairs) with the European Community offices in Spain. Eritel is the only Spanish company within its sector to find its name on the European Community Commission’s list of approved suppliers. A further contract has been awarded by the European Community to develop a communications system which will transfer social security data between the European administrations.
