If lagging investment and capital expenditure by India Inc has emerged as a cause of concern amidst declining revenue growth and low capacity utilisation for companies, job creation in the corporate world has also taken a big hit.
While infrastructure companies witnessed the biggest dip in employment numbers, the IT and pharma sectors provided the silver lining with increased staff strength.
A look at the group of 230 leading companies listed on the Bombay Stock Exchange (BSE 500), and have an aggregate market cap of over Rs 55 lakh crore, shows that for the first time in at least four years they witnessed a decline in their aggregate employee strength as it fell by 14,000 in the year ended March 2015. While 105 out of the 230 companies reduced their headcount by an aggregate of 84,688 during the year, 114 companies within the list increased their staff strength by 69,910. For the remaining 11 companies, the numbers remained constant.
The aggregate employee strength for these companies came down from 21.56 lakh in the year ended March 2014 to 21.41 lakh in the year ended March 2015. This comes in sharp contrast to the trend in the recent past.
In Financial Year (FY) 2014 the same group of 230 companies added an aggregate of 1.63 lakh employees and in the three year period between FY’11 and FY’14 they added close to 4 lakh employees.
However, the numbers fell in FY’15 as companies facing decline in revenue growth and low capacity utilisation resorted to laying off their employees.
The biggest drop in number of employees during the year was witnessed by companies in manufacturing, construction and infrastructure, and capital goods, whereas IT and pharma companies saw net addition to their employee strength.
Experts within the HR industry say that the companies have been under pressure to cut down on cost and over the last two years they have been taking measures to cut on travel cost, IT cost and reduce or shift office space among other measures.
Aditya Narayan Mishra, CEO of HR Services of Ma Foi Strategy Consultants, a leading HR solutions company, said that companies in manufacturing and infrastructure have not witnessed growth and have been taking measures to lower their staff cost.
“Five years ago, lay-offs as a strategy was not prevalent but now organisations are not shying away. There have been instances where not only employees have been laid-off but a full division within an organisation that is not doing well has been closed. Also, in many cases, if employees are leaving or retiring, the organisation is not getting their replacements,” said Mishra.
With revenue growth for companies still lagging, some say that the pressure is there even in the current financial year and several companies especially those operating in construction, infrastructure and manufacturing are downsizing their staff.
Larsen & Toubro witnessed the biggest decline in its staff strength as it fell by 10,498 in the year from 54,579 in March 2014 to 44,081 in March 2015.
Asked about this dip, a senior company official said, “During the year, L&T formed several subsidiaries and some employees moved on the payrolls of those companies.”
Data available with CMIE Prowess and Vedanta Ltd’s annual report shows that the company witnessed a sharp decline in its employee numbers (for India), which dropped by 11,285 in FY’15 over FY’14.
However, a Vedanta spokesperson said that the numbers for the two years are not comparable.