Tata Motors aims to cut 400-500 executive jobs via VRS
15 Mar 2017
Tata Motors, in its first major move under N Chandrasekaran's chairmanship, is reducing staff by offering a voluntary retirement scheme (VRS). The company is reducing its management hierarchy from 14 levels to five, and is targeting to cut 400-500 executive jobs through the scheme. This is perhaps the biggest white-collar workforce rationalisation to be undertaken by the over seven-decade-old company.
Tata Motors, a unit of the $104-billion Tata Group, had 26,569 people on its rolls in financial 2016, including both executives and blue-collar workers.
India's largest automaker by revenue has been offering VRS on and off to its employees, with the last one being taken up by 250-odd factory workers in 2015-16. That year, it had incurred an employee separation cost of Rs10 crore. Tata Motors is resorting to this extreme step again to reduce costs and to streamline its operations after losses widened at its local unit. The new organisational layer of five levels will kick in from next month.
The company has identified 120 roles in the top two levels to be made redundant, while it is in the process of ascertaining positions for the next three levels.
The management restructuring and VRS proposal was approved by the board of directors last month. Chandrasekaran was appointed chairman of Tata Motors in January.
Some of the middle-level executives will be assigned new job responsibilities and relocated to its global development centre (GDC) in Pune. This centre offers shared services in a host of areas such as finance and data analytics.
"As part of the restructuring, we have identified roles that are best located in a central, common service structure, providing services across the company through optimised and efficient processes," said a Tata Motors spokesperson. He added, "A number of roles distributed currently across the country are being relocated in the GDC. We expect significant benefits in cost, and process efficiencies."
