In a bid to enhance competitiveness, the state-owned telecom company, Bharat Sanchar Nigam Limited (BSNL), is reportedly undergoing a comprehensive review by the government. While the focus is on network upgradation and sales enhancement, there are discussions about potential cost-cutting measures, including employee cost rationalization. This has raised concerns about the possibility of layoffs in the government-owned entity.
What Could Rationalisation Mean?
The term ‘rationalisation’ often implies cost-cutting measures, with one common method being the reduction of the workforce. While private entities have frequently resorted to mass layoffs, public sector undertakings (PSUs), especially in India, have traditionally been perceived as providing secure employment. However, the recent move by BSNL indicates a potential shift in this paradigm.
BSNL’s Financial Challenges
Despite 78,323 individuals opting for the voluntary retirement scheme (VRS) since 2019, BSNL’s staff cost has remained high, accounting for 38.4% of the total revenue in the fiscal year 2022-23. The company, with a current workforce of 60,104 employees, faced a net income deficit of ₹8,162 crore, a significant portion of which was allocated to operating expenditure, including salaries and other employee-related expenses.
Transition Phase or Mass Layoffs?
BSNL has been striving to shed its image as an antiquated institution, introducing new work culture initiatives. However, the recent reports of a competitive overhaul raise questions about the possibility of mass layoffs. This development follows protests in Kerala against the ‘outsourcing regime’ and delayed payments that occurred a year ago.
The situation also comes amidst wider discussions on whether the government should be involved in business operations. The government, owning 33.14% of another struggling telco, Vodafone Idea, adds complexity to the landscape. BSNL currently holds the fourth position in market share at 8.36%, with Reliance Jio leading at 38.81%, followed by Bharti Airtel with 32.78%. Vodafone Idea, a hybrid government-private company, stands at 19.88%.
