The bloodbath in Indian telecom is set to worsen in 2018, and that may mean more job losses.
“In this calendar year, another 50,000 jobs are likely to go (in telecom) and at this point, telecom seems to be the worst-affected sector in terms of jobs. Last year about 40,000 jobs were lost,” Aditya Narayan Mishra, CEO of human resources consultancy firm CIEL HR, told Quartz. “This is happening across the sector, from companies in hardware to the ones in network operations.”
This crisis in the Indian telecom sector began after India’s richest man, Mukesh Ambani, entered the $50 billion telecom market in September 2016. In order to lure customers, Ambani’s firm, Reliance Jio, has been doling out freebies and has drastically reduced data and call charges, dealing a body blow to other operators.
“The sector has been witnessing rough weather in terms of profitability. The high cost of loan servicing and aggressive competition for market share have reduced the profitability per subscriber. This has also impacted the software and hardware providers to the telecom operators,” a report by CIEL HR, published on Jan. 15, says.
Many companies are also strapped for funds. Banks are not too keen on lending further as some of the telecom companies are already struggling to service existing loans. As the firms rework growth plans, some people are being laid off and others are jumping ship in fear, added Mishra.
Most of those quitting their telecom jobs are eyeing other sectors, adds the report. “This trend highlights the fact that the sector is not recruiting unless it is a critical need that has to be filled by external talent.”
Subdued profitability has resulted in poor salary hikes. About one-third of the total telecom employee base received less than a 5% hike, a huge dampener for morale, added the report.
The overall job market has been tentative anyway. Several other sectors, such as IT and manufacturing, have also reduced headcounts. In fact, one in 10 jobs in India may cease to exist in another five years as globalisation, demographic changes, and new-age technologies transform industries.
For the 225,000 people employed in Indian telecom, these are tense times—and will likely remain so for a year more, Mishra said.