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Multi billion dollar telecom mergers could see 25,000 pink slips and counting

Admin| Feb 15, 2017 - 11:05 PM India

Multi billion dollar telecom mergers could see 25,000 pink slips and counting

MUMBAI: The 45­ year­ old telecom executive believed he was set for life. He would easily be able to fund his son’s dream of studying music abroad, for instance. But all that’s changed over the past few months. He, like many others in the telecom industry, are faced with the prospect of losing their jobs.

Call it the price of the biggest wave of consolidation in the telecom sector after it was thrown open to non­state companies in 1995. Experts and executives vary on magnitude but there’s unanimity that massive job losses are inevitable.

Staff cost is around 4­4.5% of revenue, but the real crunch will come in sales and distribution, which in telecom is entirely people costs, said a human resources head. Sales and distribution comes to around 22% of revenue at major companies, he said. The sector’s revenue is estimated at an annual Rs 1.3 lakh crore, putting people costs at Rs 34,000­ 35,000 crore.

“There is no doubt that staff at the head office and circle (offices) are on shaky ground,” said an HR head, putting 10,000­25,000 jobs at risk, he said. Add those indirectly employed and the number could rise to as much as 1 lakh.

ET spoke to more than a dozen analysts, recruiters and company executives who said telecom employees are scared about jobs being on the line despite assurances. Employees spoke on condition of anonymity.

“Optimisation across operations, workforce and supporting infrastructure will be key and could potentially render nearly one fourth or more people redundant,” said Sandeep Chaudhary, chief executive officer, Aon Hewitt Consulting.

The Indian telecom industry employs over three lakh people directly and indirectly. A senior executive at a telco engaged in a merger talks said as many as a third could become redundant in the next 18 months as consolidation plays out.

“People have been reaching out to me, looking for opportunities. Everybody has financial commitments,” said a senior telecom executive whose company is not in the merger market.


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