According to industry sources, the combination of Reliance Communications’ operations with Aircel alone may lead to nearly 3,000 job losses. The estimated cut for the Vodafone-Idea combine is over 7,000, as both companies have pan-India operations.
The operators, though, have either denied that there will be layoffs or have chosen to downplay the possibility. Kumar Mangalam Birla, Chairman-designate of the Vodafone- Idea merged entity, said there would be no significant downsizing. HR consultants said that mergers across the world have led to layoffs. “A lot of roles in a merger get duplicated. Like you can’t have two circle heads or two heads of procurement. And in such a situation, each and every role is evaluated. The evaluation can be through a well-defined process or can be purely judgemental,” Pankaj Dutta, Managing Partner of Alexander Hughes’ India operations, told BusinessLine.
Vodafone and Idea did say they would save nearly $2.1 billion through synergies. Typically, human resources account for about a third of the cost of any telco’s revenues.
“The way telecom is structured, there is a huge army of people in every circle. When two companies come together, the revenues go up but you don’t need a proportionate increase in headcount,” said Sinosh Panicker, Partner at executive search firm Hunt Partners India.
Moreover, in any merger, there is always an in-built premium in valuation. “Costs have to be cut to make the merger viable,” Dutta added.
Rituparna Chakraborty, Executive V-P of staffing firm TeamLease Services, said any merger, in the first place, is the result of stiff competition and pressure on the bottomline. “So costs and resources have to be rationalised. It is implicit that there will be a shake-up. Even before people are asked to go, they will be looking out,” she added.
Dutta pointed out that the Indian telecom sector was at the forefront of hiring in the last decade, when companies were expanding operations at break-neck speed, rolling out newer technologies and broadening their subscriber base.
“This sector was over-hiring as it was growing fast. Now, it is time for job cuts. We could see the next round of hiring when maybe 5G is rolled out,” he added.