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Last Updated : Feb 24, 2017 04:04 PM IST | Source:

Consolidation in telecom sector may lead to 1 mn job losses

According to a GSMA report, India‘s telecom sector directly employs 2.2 million people and 1.8 million indirectly. Consolidation in the sector could cause nearly a third of these jobs to be shed.

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Not so long ago, the telecom sector was the posterboy of India Inc and the generator of millions of white-collar jobs. Low levels of tele density meant a large opportunity for mobile telephony companies back in 1995, when the industry was opened up to the private sector. But with a subscriber base crossing one billion and the high-stakes data game forcing players to come together, the sector is expected to shed as many as one million jobs (direct and indirect put together).

According to a GSMA report, India’s telecom sector directly employs 2.2 million people and 1.8 million indirectly. Consolidation in the sector could cause nearly a third of these jobs to be shed.

Also read: India faces 1.5 mn white-collar job crisis in telecom, IT, BFSI

According to Rajan Mathews, Director General of Cellular Operators Association of India, “We are very concerned about the financial health of the industry, which cannot sustain jobs if the sector does not grow in an orderly manner. With many companies exiting (Telenor, MTS, Videocon) the sector and country, we are looking at shedding 30 percent jobs in the near future.”

The trend is visible from Bharti Airtel’s employee base, which has shown a decline both sequentially and annually in the December quarter. In the third quarter, the country’s largest telecom operator had an employee base of 19,048, down from 19,462 in the September quarter. The company’s employee cost, too, is down both sequentially and year-on-year. Per employee cost was Rs 1,00,338 in the December quarter, down 5.3 percent sequentially and 2.5 percent YoY.

For long, the industry has complained about competitive intensity and a large number of players. With some players coming together to build scale and others exiting the sector altogether, the total number of operators is expected to come down from 13 to merely 4 in the next one year. This will have an impact on job creation by the sector, which has been among the top three sectors in generating white-collar employment.

Also Read: Without reskilling, IT's 1 m workforce will struggle to stay

Telecom companies also create thousands of jobs indirectly by way of their franchisee partnerships, call centres, distributors, retail stores, tower and network maintenance staff. For instance, each operator has nearly 25,000 distributors and franchise partners. Once the smaller companies merge with bigger companies, the need for contact centre agents and distributors will decline. Vodafone alone creates employment for 250,000 people both directly and indirectly. The three large telecom operators --Bharti, Idea and Vodafone – provide direct employment to 49,000 people with an average salary of Rs 1,00,000.

As the number of players sharply come down to three or four, the sector will also shed jobs. The merger of Vodafone and Idea will lead to duplication of manpower across all levels and analysts expect the merged entity to shed at least 30-40 percent of workforce in the coming 12-18 months. After the merger of Aircel and Reliance Communications, nearly 5,000 jobs are likely to be lost. Airtel’s acquisition of Telenor’s India business on Thursday will also possibly result in some job losses, in case there is duplication. Vodafone and Idea are already mapping skill sets and overlaps to exactly figure out the redundancies.

Direct Employee Base of Telecom Operators

First Published on Feb 24, 2017 02:15 pm
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