Tata Motors is likely to save Rs 300-400 crore from its mega restructuring plan that involves workforce reshuffle, and even layoffs.
Nearly 1300 white-collar employees have been moved to different roles, transferred to other units, or discharged of their services, as per an Economic Times report. Moreover, 2,500 positions in the company have been razed in last 18 months to increase the net profit.
These measures were necessary to trim employee costs, which could have surged by 400-450 crore otherwise, the Head of Human Resource Gajendra Chandel told ET. “When we did the budgeting for this year vis-a-vis the new structure, there is a gap of Rs 400 crore,” he added.
The company plans to lay off 10 percent of its near 30,000 blue-collar workforce, and is working to improve productivity through skill development.
Tata Motors’ recent introduction of performance-linked pay for factory workers had boosted productivity by 25-30 percent, said Chandel.
An unstable market for commercial vehicles, and tough competition from both Indian and foreign rivals has driven the company to take such dire measures.
The company has also gone through some important changes in terms of leadership. Earlier this month, Girish Wagh replaced Ravindra Pisharody as head of product line of medium and heavy commercial vehicles. In February, Guenter Butschek took over the position of Managing Director and since then, he has introduced many changes in the organisational structure.
The company got Ernst & Young to study management structure and work on the job evaluation system. As a result, earlier 14 layers of management has come down to only five layers.
Last month, Butscheck announced that the company had reduced its domestic managerial workforce by 10-12 percent which is around 1,500 people.
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