Reliance Jio cuts nearly 5,000 jobs, including 500-600 regular ones
31 May 2019
Mukesh Ambani’s telecom venture Reliance Jio Infocomm has reportedly laid off around 5,000 employees, a large number of them contractual workers, as part of the telco’s cost-reduction exercise. Reports say about 500-600 regular employees were also affected by the cost reduction exercise.
The job-cuts come in the aftermath of a fall in the operating margin of Jio in the January-March quarter, according to some reports.
Redundancies were reported mostly in the customer support department while other departments that remained staff-heavy included supply chain, human resources, finance, administration, and networks.
“We are expanding our consumer businesses and Jio continues to be a net recruiter in the industry. We also work with contractors who may be hiring staff on fixed time contracts for our various project construction activities. Given we continue to recruit actively, the question of a cost pressure led action is not relevant,” a Jio spokesperson was quoted as saying.
Jio employs some 15,000 to 20,000 workers in its payroll across the country while the actual number of people dependent on Jio would be much larger. These also include employees that are employed by a staffing firm hired by Jio.
Jio reported earnings before interest, tax, depreciation and amortisation (Ebitda) margin of 39 per cent for the January-March 2018-19 quarter, down 5 basis points from the previous quarter, while its total expenses rose nearly 8 per cent quarter-on-quarter, mainly on the back of higher network operating costs, finance expenses, and depreciation and amortisation charges.
Typically, the employee costs range 5-6% among telecom operators and companies working to control costs tend to drop the axe first on the workforce rather than improving the services.
Reliance Jio is the only company that has been making profits in the Indian market. Moreover, the company enjoys financial support from cash-rich Reliance Industries besides a favourable regulatory environment.
It was because of Mukesh Ambani’s financial muscle that Jio with its aggressive pricing strategy, could make it a success in the $50 billion Indian telecom market.
The aggressive strategies of Reliance Jio had resulted in a consolidation in the sector with some of the big ones also merging and retrenching employees in the process. An estimated 75,000 jobs have been lost in the telecom sector in 2017 alone, due to financial stress faced by companies and ,more people are expected to lose jobs in the coming years as consolidation progresses.