Airtel- Telenor to RCom-Aircel: Mergers may wipe off 10-15% jobs in telecom

The spate of consolidation in the telecom sector could lead to job redundancies 10-15 per cent over the next two years, say analysts and HR experts.  The three mergers in the works — RCom-Aircel, Vodafone-Idea and Airtel-Telenor —  if they go through regulatory and operational hurdles, are likely to create capex synergies across networks, rationalise selling and marketing expenses of the players and reduce overall manpower costs for the industry. 

“One of seven jobs in the sector is under threat. Most impacted will be jobs connected with sales and distribution and those in the infrastructure services space,” said the head of an executive search firm, who is advising one of the large players on the HR front. 

According to Randstad India managing director and CEO Moorthy K Uppaluri, the Indian telecom industry employs around two million people directly and indirectly. While the consolidation initiatives will spur growth in the industry in the long term, there will be optimisation across frontline sales and support functions such as finance, HR and other corporate roles. “Overall, close to 20-40 per cent of support function roles are expected to be at risk as consolidation plays out, which is in the next 12-20 months,” he said.  

Tanu Sharma, associate director, India Ratings and Research, said hiring sentiment for the sector is likely to take a hit. “However any cut in jobs is likely to play out only over the next two years.” For most large players, employee salaries are anywhere from four-five per cent of their sales revenue. With consolidation, employee costs are expected to come down. 

HR experts said consolidation among telecom players will have a ripple effect on the entire sector and allied system. This is because the ratio of direct to indirect jobs in the telecom sector is estimated to be around 1:4. That is, every direct job leads to creation of four jobs in the indirect and tertiary sectors, says a management consultant from one of the Big Four advisory firms, which has several telecom clients.

K Sudarshan, managing partner, EMA Partners International, an executive search firm, said when a sector goes through consolidation generally it is those in middle management who face most of the squeeze. But telecom experts said the current round of consolidation will face several regulatory and operational challenges before going through. “It may be early days yet before realising the full impact of these initiatives,” said a management consultant.