BroadBand Office Inc. today confirmed that it has laid off 69 people this week. Also, as part of a company-wide reorganization, it is outsourcing many of the services it provides in order to cut costs and come closer to making a profit.

"We've recently gone through a comprehensive corporate reorganization to advance our profitability timeline and better align ourselves to meet customer demand," writes BBO spokesman Scott Radcliffe, in an email interview. "The layoffs are the result of that reorganization... Our goal of providing businesses with integrated applications, network and computing services has not changed." BBO's total headcount now stands at about 435, he writes.

Sources close to BBO, including several of those recently let go, say that BBO is still doing what it set out to do when it was founded -- to provide a high-speed connection to business customers in commercial buildings and offer IP-based services through that connection.

What has changed over the past few months is that BBO has shed the idea of being a large integrated company that runs its own network and hosts its own services. It now favors being a customer service company that buys and resells Internet connections, virtual private networks, hosted software, etc., so that business customers pay one company for many different services.

Light Reading was the first to report that BBO was getting out of the IP backbone business when it formed Zephion, a network service provider that, like BBO, is backed by Kleiner Perkins Caufield & Byers. Now, thanks to relationships with Eforce and other undisclosed firms, BBO is becoming more of a service aggregator than before (see Kleiner Perkins Builds Backbone Carrier and Kleiner Readies BBO's Rebirth).

Employees let go this week generally have good things to say about BBO, but a few express regret that its management was ham-handed at times, saying that many of the layoff decisions tended to favor the firm's Silicon Valley headquarters. "They let go five marketing people in Virginia and turned around and hired a marketing group in Silicon Valley," said one.

Some Virginia employees who reported to Silicon Valley-based managers were laid off via telephone, according to sources close to the Silicon Valley office.

Several sources say the management picture is somewhat cloudy at BBO. Dan Chu, the company's founder, was its first CEO and still serves as president. He gave up the CEO title "a few months ago," according to Radcliffe.

"Dan Chu is concentrating on getting BBO funded, and the management of the company is left up to a committee of its senior staff," one ex-BBO employee explains. The "committee" the source refers to is made up of Marshall Bauer, BBO's sales boss; Scott Langmack, its vice president of products and strategy; and Rachelle Chong, its general counsel.

BBO won't say how many customers it has or what its revenues are, nor will it break down the number of staffers in each of its offices. The company also declined to comment on its management style. BBO says it's raised $150 million in venture funding to date and confirms that it's currently seeking additional financing.

-- Phil Harvey, senior editor, Light Reading http://www.lightreading.com