Telecom Layoffs Under the Head of Cost Cutting

Even when mobile operators are making fortunes out of their businesses in Pakistan, their yearly objective still remains to slash as much expenditure as possible – which is natural for a business.

The meaning of expenditures, however, varies. Managers, Senior Managers and Directors make their way from Islamabad for regional meetings, stay at lavish hotels, dine at starred restaurants — but when it comes to cost cutting, good quality tissue paper is replaced with bad one in the company headquarter. That’s like deleting text files to create space on your 500 Tera Bytes hard disk.

Such kind of irrational spends and then layoffs (or even outsourcing the workforce by shifting resources to a third party) in the name of cost cutting is yet to make sense.

Station at equipment vendors is not different. Let’s have a look at them:

Pakistani Telecom Vendors:

One of country’s biggest cellular operators is now planning to cut short its security staff from the physical site locations in order to cut its operational expenditures. They have 11,500 guards for 6,500 sites and that is a big number. For equal number of sites, another operator has lesser guards.

Another major expenditure is the capital an operator has to set aside to give out as rent to the owners of lands/buildings where their sites are plotted. This rent is, in one way, security money as well. An operator is not bound to pay anything more. Thus operators are now moving to cut the number of guards allocated to sites installed on lands owned by vaderas as the rent which an operator pay for such sites inherently include the owner’s responsibility of site’s security.

That’s for the cost cutting on non-technical staff.

In operators, usually, the technical division never gets in the firing line. For other work forces like SMEs, contractors and sub-contractors, the layoff is done with independence of technical expertise. Sub-contractors are known for releasing human resource the moment a project with telecom operator/vendor terminates but positions in telecom operators are by far considered most secure. In fact ‘complacent’ is a word more suitable. News such as in July this year, Wateen’s layoff of 20% of its workforce with majority of them from technical division is rarely spotted.

Global Telecom Vendors

Telecommunication equipment providers are responsible for innovating and later introducing that innovation to service providers. So purposefully their work force comprises almost 50% (figure now varies due to major outsourcing done in recent years) of Research and Development personnel mastered in fields of digital radio communication and micro electronics; second highest is the number of the operations and maintenance personnel.

So, a vendor’s sole business to sell its equipment or its technical expertise to a mobile services provider. Thus, when a vendor runs out of business, its way to curb expenditure is by releasing off its resources.

Considering the recession phase which impacted severely on global telecom vendors in last few years saw a record lay off per annum. The trend for telecom vendors depicts that the slashing wave first hits the fraction of marketing and sales personnel before digging down at the technical staff.

Last month, French vendor Alcatel-Lucent made public that it’ll cut over 5000 jobs worldwide to avail 1.25 billion Euros in cost savings. Interestingly, the company has a work force of 76,000 globally and this lay off will only see sales and HR personnel exiting the door while the 26,000 Research and Development staff will stay put.

Nokia Siemens Networks, known to have recently run out of business from Pakistan, announced that it will cut almost 17,000 jobs by end of 2013.

Here’s an overview of the situation: