The falling number of operators in every telecom circle in the country has resulted in thousands of job losses in the sector over the last 12-18 months. From around 10 operators on average some two years ago, each telecom circle today has only six operators on average.
According to a report by recruitment firm CIEL HR, some 80,000-90,000 jobs could be lost in the sector over the first two or three quarters of the ongoing calendar year, which will be double the number of telecom jobs — 40,000 — that were lost in 2017.
More layoffs could follow as ongoing processes of mergers and acquisitions are completed, and even fewer operators are left in the field. The merger of Vodafone India, the country’s second largest mobile operator, and third-placed Idea Cellular, which is expected to create India’s largest mobile phone company, could see 5,000 jobs being lost, according to industry estimates — a number that Vodafone has disputed.
The largest player in India, Bharti Airtel, is in the process of acquiring Telenor India and Tata Teleservices.
“Traditionally, once a deal for merger or acquisition is announced, employees of the smaller company in the deal start looking for jobs elsewhere. While junior or entry-level employees have the option of re-skilling themselves to move out of the sector, the job cuts tend to impact middle-management,” a senior executive with a large telecom company told The Sunday Express on condition of anonymity.
Responding to a query sent by this newspaper, a spokesperson for Vodafone India said no decisions had so far been taken on the workforce of the merged entity.
“This (estimates of job losses) is pure speculation and totally untrue. The two companies have not received final merger approvals and so the leadership teams of Vodafone and Idea continue to compete in the market and manage their businesses separately. No decisions have been taken about the workforce of the merged entity, although it is fair to assume that employees will benefit from the opportunities that arise from working for a significantly larger operation,” the spokesperson said.
Bharti Airtel, Tata Teleservices, and Idea Cellular, an Aditya Birla Group company, did not respond to e-mails seeking comments for this report.
“Since productivity in the telecom sector is rising regularly, there is always room for a degree of staff rationalisation. Given the stress that the sector is under, I won’t be surprised if companies continue to shed jobs to cut costs,” Mahesh Uppal, director of telecom consultancy firm ComFirst, said.
“The telecom sector involves high capital expenses but relatively low incremental costs. There may not be a corresponding increase in staff requirement as the business grows. There is a massive pressure on jobs, and clearly, when large companies merge, some staff does become redundant,” Uppal added.
An executive aware of details of the Vodafone-Idea merger process said the bulk of the cost that the integration would save was the cost of technology. “The employee cost is about 5 per cent of the operational expenditure. The focus of the management in that case will be saving from the 95 per cent. Both the organisations have not been hiring actively for the last 12-15 months. There are multiple options such as retraining and redeployment for the overlapping roles, so if you see from a size and scale perspective, the numbers are going to be extremely marginal.” This executive also said that the attrition rates at both Vodafone and Idea had been in the range of 15-20 per cent over the past couple of years.
Pricing pressures and consequent weak financials following the entry of Reliance Jio has been the primary catalyst for the consolidation drive in the sector. Several small companies have sold their assets to larger competitors. Jio’s entry led to the creation of a number of additional roles for existing employees across positions, but the sector may still have reached the saturation point. “Consolidation will probably affect entry-level and middle-level employees because staff needs do not rise as steeply when volumes rise. If volumes double, staff does not double as well,” Uppal said.