Telstra Corp. Ltd. CIO Jeff Smith, the man who brought offshoring IT into the Australian vernacular, has quit his post amidst market rumours of wholesale lay-offs to come prior to the federal government"s May Budget.

An e-mail circulated to staff from general managing director of Telstra technology, innovation and products, Ted Pretty, stated Smith was leaving his post "following the completion of his assignment to bring together Telstra"s IT groups, transform our IT delivery model and develop new partnerships".

Smith"s last day will be March 31.

While Pretty"s e-mail heaped praise on Smith, it also confirmed a shakeup of IT operations is imminent.

"I will take this opportunity to review the IT leadership structure as we have reached the tail end of the IT Transformation project and are about to embark on a more operational phase. I have every confidence that the IT team can deliver real innovation and further productivity gains to Telstra and I will make further announcements shortly," Pretty"s e-mail said.

Asked to comment, a Telstra spokesman declined to deviate from Pretty"s e-mail, other than saying Smith"s strategic plan was on track and Telstra"s deputy CIO Vish Padbranham would be implementing the "more operational phase".

An acolyte and recruit of Smith"s, Padbranham is understood to have been preparing to implement some cuts of around 10 percent to Telstra"s IT management structure.

Other changes signalled include finally consolidating some 50 unwieldy billing systems that currently prevent a much desired single customer view within the telco.

While Smith made little secret of his preference to offshore consolidated billing applications development, little has been heard of the progress of the project - other than Pretty"s frank admission he had used Linux as a blunt instrument to leverage lower prices from Microsoft in September 2004.

Speaking to Computerworld at the time, Pretty said, "Do I think that the whole open source debate put pressure on Microsoft to rethink its approach to its customers, rethink its pricing and do all of those things? Absolutely. Have we benefitted from that? Absolutely. I think it"s changed the nature of how they operated and I think that"s good."

Meanwhile, the search for new CEOs for both the telco - and its directory subsidiary Sensis, continues.