Business Transformation

Indian M&A Forces Telcos Into Workforce Overhaul

The current wave of mergers and acquisitions sweeping across India's telecom landscape is set to have a profound impact on the telecom workforce. Triggered largely by the recent arrival in the market of Reliance Jio, which has caused mayhem by offering free voice and data services to customers, the upheaval will be a painful one for many employees. But it could also give India's operators an opportunity to transform their workforces and make sure they are better prepared for the challenges ahead.

Experts certainly anticipate widespread job losses following the recent spate of consolidation. Those will result in particular from a $23 billion merger between Vodafone India and Idea Cellular Ltd. , India's second- and third-biggest operators, whose activities and operations overlap considerably (and unsurprisingly). (See Vodafone, Idea Strike $23B Deal to Form India's Biggest Telco.)

Besides that deal, current market leader Bharti Airtel Ltd. (Mumbai: BHARTIARTL) has also recently acquired Telenor Group (Nasdaq: TELN), Videocon Telecommunications Ltd. and Tikona Digital Networks Pvt. Ltd. And the market remains abuzz with talk of a possible merger between Mahanagar Telephone Nigam Ltd. (MTNL) and Bharat Sanchar Nigam Ltd. (BSNL) , two government-owned service providers. While it is difficult to put a concrete number on job losses, the figure is likely to exceed 10,000. Some market watchers believe that between 20% and 30% of the workforce could be made redundant as a result of merger and takeover activity. (See Airtel Acquires Tikona to Fill 4G Gaps and Airtel to Acquire Telenor in India.)

From a service provider perspective, however, the looming consolidation could be an opportunity to re-skill workforces as telcos try to become more like agile ICT players and less like uninspiring utilities.

"There will definitely be some rationalization of the workforce because of consolidation," says Amresh Nandan, the director of the communications service provider business for market research firm Gartner India. "However, the industry is facing bigger issues: Telcos all over the world are realizing that they have to go beyond their traditional products, services and operational models. Some are working to transform into ICT firms, and that is no different for Indian telcos."

"Automation and changes in the operating model will have an impact on about 20% of the workforce," adds Nandan. "To retrain this workforce, it is important to re-skill them on new technologies and new operating models. Many global service providers such as AT&T, Verizon and Telefónica started the process of workforce transformation and re-skilling their employees about two years back. Indian telcos may use the opportunity of consolidation to transform their workforces as well."

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Although India's telcos will be forced to jettison a significant number of staff, they will have to look at retaining and attracting the right kind of talent for this digital transformation. Providing connectivity alone is no longer enough. Cut-throat competition means that service providers need to come up with different service offerings to defend their turf.

An immediate priority may be to develop greater expertise in areas such as data center technology and analytics. Other telcos worldwide have also been exploring opportunities in the much-vaunted Internet of Things, and weighing their options in fields like machine learning and artificial intelligence -- a clear focus for technology giants including Facebook and Google (Nasdaq: GOOG).

"To transform themselves, Indian telcos need to attract relevant technology talent, but that is also in demand from several other industry verticals," says Nandan. "At the same time, there is a need to retrain the existing workforce to keep pace with the times."

— Gagandeep Kaur, contributing editor, special to Light Reading

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