Hiring in India’s once-thriving telecom industry is likely to remain subdued through 2013. Since the cancellation of the 122 controversial licences in 2012 and the winding up of operations by companies like S Tel and Etisalat, many telecom professionals have lost their jobs.

The unrelenting pressure on margins, stagnating revenues, declining profitability and rising operating costs have forced leading operators to freeze fresh recruitments and reallocate internal resources.

After posting a 72 per cent decline in net profits for the quarter ended December 2012 (the twelfth consecutive quarterly decline), Bharti Airtel undertook a major revamp to streamline its operations. Meanwhile, companies like Aircel, Uninor, Shyam Telecom and Tata Teleservices Limited (TTSL) decided to ring down the curtains on their operations in non-lucrative circles to remain competitive.

Equipment manufacturers are not much better off. With operators deferring investments in technology upgradation and fresh network roll-outs owing to financial constraints, they have been facing tough times. Vendors, who were banking on 3G service uptake and 4G roll-outs, have been adversely impacted by the slow start of these services. “Not much hiring is expected from equipment vendors like Qualcomm, Alcatel-Lucent, Nokia Siemens Networks and Ericsson as they are under tremendous cost pressures,” notes a senior official from Quorum Consultancy.

According to recruitment firm GlobalHunt, hiring in the telecom sector contracted by 60 to 70 per cent in the first two quarters of 2012 as compared to the previous year. However, Uday Sodhi, chief executive officer of HeadHonchos, a job search engine, believes that this is a short-term trend. “The growth opportunities offered by telecom should not be dismissed, as the sector still has a lot of potential,” he says.

Industry experts also see a silver lining in emerging telecom segments, which could offer recruitment possibilities in the long term. Cloud computing, value-added services (VAS), location-based services and enterprise businesses are some of the areas that are likely to witness demand for manpower in the next few years. According to Spearhead Intersearch, the VAS space will generate significant employment opportunities, driven by the uptake of 3G services. “The increase in demand for innovative content on mobile handsets will require numerous new services to be launched, for which manpower will be required,” says a senior company official.

Overseas telecom markets are the other option. Analysts expect considerable demand for Indian telecom professionals abroad. According to various head-hunting firms, the Middle East and Africa present lucrative employment opportunities with global telecom companies rolling out services in these regions. For example, Etisalat, Bharti Airtel and the BT Group are expanding their operations in Africa and are hiring largely Indian telecom executives with experience.

tele.net takes a look at the hiring trends in the industry as well as the restructuring efforts of operators, the major movements by telecom professionals and key strategies for employee retention…

Organisational restructuring

Bharti Airtel

Challenging market conditions, regulatory uncertainty, hypercompetition and its bleeding African operations have adversely impacted Bharti Airtel’s business. To optimise operations, the company recently undertook a major revamp of its organisational structure – the third in three years.

As part of this exercise, the company outlined a new hub organisation design for its India operations. Instead of the existing three regional hubs, the organisation will now have eight hubs with their heads reporting to the director, market operations, a newly created position. Circle chief executive officers (CEOs), who report to a hub CEO, will continue to operate with the same level of independence. This restructuring is expected to give a fillip to the company’s initiatives to build a more connected organisation that is closer to the marketplace.

On the operations side, Bharti Airtel is in the process of buying the entire equity stake in Alcatel-Lucent Managed Network Service India, a joint venture (JV) that had been formed between Bharti and Alcatel-Lucent to manage and deploy the former’s fixed line and broadband network in India. Alcatel-Lucent had 74 per cent stake in the JV while Bharti owned the rest. According to Bharti, this move is part of a new business model to manage its own fixed line and broadband network. It will form a managed services company, which will operate independent of Bharti, and function along the lines of Indus Towers. Other operators will be invited to join in with equity participation and bring the management of their broadband and fixed line networks within the company’s fold.

Meanwhile, shortly before it announced its new structure, three key executives exited the company: Amrita Gangotra, director, IT (India and South Asia); Shankar Halder, head, network operations (India and South Asia); and S. Asokan, head, supply chain. Moti Gyamlani, former vice-president of GE Energy’s global supply chain function, has been brought in to replace Asokan.

In January this year, in an unexpected move, Sanjay Kapoor, CEO, India and South Asia, announced his plans to leave the company after a 15-year stint. He has been replaced by Gopal Vittal, formerly group director, special projects.

Aircel

In late 2012, Aircel, promoted by Malaysia’s Maxis Communications, announced its plans to shut down operations in five non-lucrative circles – Madhya Pradesh, Gujarat, Haryana, Rajasthan and Punjab. The decision was prompted by the need to cut service costs and remain competitive. According to a company statement, “The telecom industry is facing severe margin pressures as the voice market is maturing and data demand, in its true sense, is still nascent. Operational costs are high and incremental market demand for relatively new players is prohibitive.”

As such, the company had to let go of some of its employees. Industry experts put the figure at 500. The impact was also felt on its user base, which shrank from 66 million in September 2012 to about 60 million in January 2013.

Aircel now has an online-based business model for the five impacted circles. A website has been created for each circle and customers can either terminate their subscription or subscribe to any service offered by the operator via these portals.

TTSL

TTSL’s licences in the Jammu & Kashmir, Assam and Northeast circles were amongst the 122 licences cancelled by the Supreme Court. It subsequently decided to not participate in the November 2012 2G spectrum auction and instead close down operations in these circles.

As per data released by the Telecom Regulatory Authority of India, these circles contribute the lowest revenues to the company and have the least number of subscribers. To illustrate, it generated revenue of Rs 140.8 million from 128,000 subscribers in Assam, as compared to Rs 3.38 billion from 7.38 million subscribers in Karnataka.

Following the decision to wrap up operations in the three circles, the company devised an action plan to absorb the impacted employees. However, as per news reports, it had to retrench around 120 employees in Jammu & Kashmir.

The company now plans to focus on its revenue generating circles.

SSTL

Sistema Shyam TeleServices Limited (SSTL), which lost 21 licences following the Supreme Court ruling, was the only company to participate in the recently concluded CDMA spectrum auction. The company, which operates under the MTS brand, won airwaves in eight circles for

Rs 36.39 billion. It had originally planned to bid for 11 circles but finally decided against the Mumbai, Maharashtra and Uttar Pradesh (East) circles (which account for 1.5 million of its customers) as, according to the company, the combined base price for these three circles was more than 35 per cent of the total reserve price for all 11 circles.

Earlier in the month, SSTL announced its decision to close down operations in 10 circles. The announcement followed a Supreme Court order directing all operators whose licences had been terminated in February 2011 and who did not participate in or were unsuccessful in the November 2012 2G auction to discontinue operations with immediate effect.

After the auction, SSTL will have a presence in only nine circles – Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West), West Bengal and Rajasthan (where its licence had not been cancelled). As per the company, these nine circles account for 75 per cent of its current revenues. Its subscriber base is expected to come down by 25 per cent, from 14 million to 10.5 million. Also, about 15 per cent of its 2,850 employees work in the three circles it did not bid for. It intends to relocate these employees to other circles.

Going forward, the company plans to focus on a data-centric strategy in select circles and strengthen its brand equity in the country.

Uninor

Following the Supreme Court order, Uninor wound up its operations in the Mumbai circle. “Going by the court order, which asked for immediate closure of operations, and with no temporary licence, Uninor was left with little choice but to close down operations in Mumbai,” notes Sigve Brekke, managing director, Uninor. The company has started the process of refunding money to customers in the circle and assisting them to port out of its network.

Meanwhile, the company’s majority stakeholder, Telenor, participated in the November 2012 auction through a new entity, Telewings Communications. It won spectrum in six circles and is currently in the process of transferring its business in Maharashtra and Goa, Gujarat, Uttar Pradesh (East and West), Bihar and Jharkhand, and Andhra Pradesh to the new company. It also plans to sign roaming agreements with other operators to ensure that its customers remain connected when travelling to Mumbai.

Likely future trends

As is evident, operators, vendors and device makers are making every effort to cut costs and become profitable in a difficult market scenario. And this includes employee downsizing. Google’s Motorola Mobility unit, for instance, plans to shed another 1,200 jobs as the smartphone maker endeavours to return to profitability. The email explaining the job cuts affecting employees in the US, China and India states, “Our costs are too high, we are operating in markets where we are not competitive and we are losing money.”

While a few companies are trying to relocate and absorb some of their employees into other operational streams, it is indeed tough going. On the positive side, it is expected that telecom companies will look for people with specific skill sets in areas that are likely to gain traction. “These include customer experience, analytics and business intelligence, technology integration, innovation and retail,” says Mohammad Chowdhury, executive director and leader, telecom industry, PricewaterhouseCoopers.

According to industry analysts, the expected surge in data-based services will drive the demand for analytics professionals who can sort data and identify products that are most relevant for consumers. It is also expected that most of the hiring will be in the area of mobile software cloud-based solutions for telecom, and mobile applications for consumers and enterprises. The uptake of value-added services and applications will also spur demand for software telecom engineers and application developers, especially for Android platforms.

Industry analysts say that employment opportunities will not be the same at all levels. While the junior and middle management levels are expected to witness some activity, the hiring at the CXO level will remain flat. Analysts also expect hiring in the sales domain to see an increase, especially in Tier II and Tier III cities.

In sum, hiring in the telecom space is set to pick up later in the year, especially in the event of higher 3G service uptake and LTE roll-outs. It is likely, therefore, that companies such as Reliance Jio Infocomm and Videocon Telecommunications Limited, which are planning to launch services across India soon, will want to cherry-pick the best talent going forward.