The tariff war in the telecom space is not painting a rosy picture for the industry as this has led to another year of low increment for the employees in this sector. But this year, the situation is worse as 30-40 percent workers may not get any salary hike
But that’s not it. Employees are likely to see a 50 percent drop in bonus payouts as well.
“At least 30 percent of the employees may see no increment this year and there will be a fall in their bonuses as the industry has a large talent pool available without jobs and those employed cannot call the shots,” said Navnit Sinha, chairman of search firm Korn Ferry.
Last year, a report by HR consultancy firm Aon Hewitt had said that telecom operators are likely to give out an average increment of 7.6 percent.
Only about 40-50 percent of bonus amounts are likely to be rolled out, said eight HR firms who work with the companies in the industry.
The increments starts typically in June for the sector and about 30-40 percent of a senior management's salary is the bonus component. The middle order and junior segment have 20 percent and 10 percent bonus weaved into their salaries.
Why are companies in the telecom space unable to give their employees a salary hike?
The entry of a new player in the telecom sector (Reliance Jio) disrupted the space leading to price wars. Post Jio's entry, a stiff price war has erupted between the companies. Jio continues to expand its subscriber base with discounted offers while the other telcos are struggling with consolidation setting in the sector.
The telecom industry comprises operators, tower firms, infrastructure providers and equipment makers. All these segments have shed at least one lakh employees in the past 16 months due to tariff wars which forced some to shut shop or merge. The companies that are surviving the price battle have taken huge revenue hits.
"The past one year has been a difficult period and as a result, about 40 percent of the workforce may not get a raise, and even if they do, it will be a marginal one," said Rajan Mathews, director general at Cellular Operators Association of India (COAI).
So, in towers and infrastructure providers, in best case scenario the average hike would be around 9 percent or the same as last year,” said Anandorup Ghose, partner at Aon India Consulting, adding that bonus may come down very significantly.
Reskilling leads to no increments but top performers in the safe net
According to Mathews, while the top performers may get some raise, telcos will look at re-skilling employees keeping in mind the new technological needs of the sector.
“We are focusing on reducing the operating expenses in ground rental, maintenance, energy, security, and growing our productivity, exponentially,” said Eugene Valles, Head – human resources, GTL Infrastructure. – Money Control