MUMBAI: The telecom sector lost a fourth of its workforce, or some 75,000 employees, in the last one year as operators, tower firms and vendors consolidate to remain afloat in the severely competitive industry.
In the telecom industry, manpower accounts for 4-5% of the costs, but in the last few years there was no reining in of salaries. Now that expenses need to be harnessed, employees will be the first casualty.
Players are shutting shop, shrinking operations and shedding flab in terms of both permanent and contract employees to run a tight ship, and now only 75% of the workforce remain from a year ago. More exits are on the anvil.
“About a year ago, there were three lakh employees, 25% of which have moved out of the sector in the last 12 months,” said A Ramachandran, partner at search firm Ema Partners. Most job losses are through involuntary attrition, which means they have been asked to go by the companies with a few months’ notice and a severance package of 3-6 months’ salary in some cases.
Ramachandran said that 35-40% of employees in vendor companies have left the sector while operators have seen 25-30% of their workforce shrink in the same period.
For the 2.25 lakh employees left in the sector, the turbulent period has just started because once mergers take place overlapping areas will see manpower further slashed.
Those who have niche skills will find it harder to adapt to other industries and this, say recruiters, is likely to affect middle- and senior-level employees who will have fewer places to go to.
“About 50% of the employees in the telecom sector are middle managers and at least 25-30% of them who quit or were asked to go belong to this category,” said Vivek Mehta, executive director for ABC Consultants, who oversees telecom hiring. This means about 20,000 employees from the mid segment are not employed by the industry anymore.
Atop executive in an incumbent telco said the company is not refilling vacant posts anytime soon.
According to Centre for Monitoring Indian Economy, about 1.5 million jobs were lost in January-April 2017, which means fewer places to get hired when overall employment in India Inc has dipped.
ABC Consultants’ Mehta added that there will be another, fresh round of exits once mergers take shape since consolidation is still in approval stages for many. “There will be at least another 15% reduction in manpower,” he says.
The telecom sector, reeling under Rs 5 lakh crore of debt and facing a sharp fall in revenue, profitability and free cash flows, has been on a consolidation spree since Reliance Jio’s entry in September last year. Second-ranked telco Vodafone India and No. 3 Idea Cellular are on track to merge while Bharti Airtel has announced its intentions to pick up the wireless business of Tata Teleservices, having earlier bought Telenor India.
Reliance Communications has decided to plug most of its wireless business by November end, while Aircel is believed to be concentrating on a few niche circles and winding up business in others.
It is not just the mobile phone operators but even those in the vendor segment and tower companies too have been shedding flab. The impact has been such that a recruitment company’s head, who did not want to be named, said that his telecom vertical now has only two hiring agents, down from eight members a few months ago.
Recruiters say there has been a 35-40% increase in resumes coming in from employees in the telecom sector who want to exit the industry as soon as possible. The employees across levels are gearing to take a pay cut and head for the e-commerce, transport, logistics and FMCG.
Hiring experts say those who have been asked to leave have got wages of a few months as severance packages. Another recruiter told ET on condition of anonymity that few of the telcos cutting costs and changing their business outlook have reached out to them to outplace their employees.
An outplacement agency helps candidates who have been retrenched look for another job or get skilled. The company that is letting go often reaches out to the outplacement firms.
Kris Lakshmikanth, chairman of search firm Headhunters India, has seen a 10-15% drop in hiring at the senior management level and has noticed 25-33% drop in the overall workforce strength of the industry.
Staffing firms said clients are asking for more contract employees with knowledge of software and technical aspects of tower and infrastructure business.
“The last one year has been almost lull for us from the operators’ side, but we expect hiring demand coming in from infrastructure and tower companies as investments pick up in the segment and towers and fibre cables are laid down,” says Rituparna Chakraborty, executive vice president, Teamlease Services.