Layoffs in top listed companies point to gathering growth cloud

IT sector has been excluded from the initial analysis because employment in IT sector is more dependent on growth and demand in US and European markets. (Photo: Reuters)

Employment figures of leading listed companies, examined by The Indian Express, show that a majority of them have seen a net decline in their employment numbers in 2016-17 over that in previous years.

Job data for 121 companies — excluding IT and financial services sector — that are part of BSE 500 and for whom numbers were available for the fiscal ended March 2017, show that net hiring in these companies fell from 742,012 to 730,694. That’s a decline of 11,318 employees across sectors such as metal, power, capital goods, construction and FMCG among others.

Of these 121 companies, data for the last three years is available for 107 and this shows a net aggregate decline in headcount for the second consecutive year. For the set of 107 companies, while employee numbers stood at 684,452 at the end of March 2015, it came down to 677,296 at the end of March 2016 and then to 669,784 at the end of March 2017.

These numbers may seem small but experts say they point to a trend of concern: a net aggregate decline in employee strength of the biggest companies in the country reflects upon the lack of expansion plan and near-term growth expectation of these companies.

“A number of companies in the manufacturing space are already saddled with high unutilised capacities and, therefore, instead of hiring they are taking measures to reduce their staff cost. Also, in many cases, if employees are leaving or retiring, the organisation is not getting replacements,” a top executive with a leading HR firm said.

Of the 121 companies in the list, while 49 saw a net decline in their employee numbers at the end of the financial year 2016-17, 68 saw some addition to their net employee strength. Four companies witnessed no change in net numbers. The analysis is based on data sourced from Prowess IQ, CMIE.

There are some who feel that the sample size is too small to draw a conclusion. “It is not clear if the demand is collapsing. I feel that while there may be a problem in formal jobs, it may not be so for jobs per se. We will have to wait for more data to come in and it is inconclusive as of now,” said Manish Sabharwal, co-founder and chairman of TeamLease Services. He said that over the last 24 months, almost 20 million new Provident Fund accounts have come up. “It is, however, unclear if these are a result of rebatching (registering unregistered employees) or also a result of new

Several companies in metal, capital goods, retail, power and cement saw a net decline in their employee numbers.

The biggest decline in numbers was seen by Firstsource Solutions, a BPO owned by the RP-Sanjiv Goenka Group, that saw its employee strength go down by 7,552 during the year from 23,886 at the end of March 2016 to 16,334 at the end of the March 2017. Apollo Tyres and Heritage Foods were next in line, with the workforce numbers going down by 4,272 and 2,657 respectively.

Kesoram Industries, Amara Raja Batteries and BHEL also saw a decline in their workforce numbers by over 2000. Some of the large companies that witnessed a notable decline in their employee numbers were L&T (1,888), Hindustan Unilever (1,453), Idea Cellular (707), ACC (535), Tata Motors (534), Tata Steel (450), Hindalco (439) and Titan Industries (422) among others.

On the other hand, several companies in sectors such as pharmaceutical and automobile, among others, saw a net addition to their employee numbers during the year. The biggest addition was seen in Abbott India that added a net of 3,127 employees during the year followed by Sun Pharmaceuticals that added 2,769 employees. Vedanta added 2,489 employees during the year. Other pharmaceutical companies that saw net employee addition during the year include: Dr Reddy’s Lab (1,012), Alembic Pharmaceutical (818) and Piramal Enterprises (230) among others.

In line with the rise in sales of cars and other automobiles, five leading automobile players Ashok Leyland, Maruti Suzuki India, Hero MotoCorp, Eicher Motors and Mahindra & Mahindra added a net of 3,142 employees during the year.

IT sector has been excluded from the initial analysis because employment in IT sector is more dependent on growth and demand in US and European markets. As for banking and financial services, it has been excluded because employment generation in banks is more linked to penetration and reach of banking and financial services to individuals across the country. Experts say that banking and financial services is not a core sector of the economy.

Employment numbers for IT and banking and financial services companies have been much better.

The group of 52 companies in the IT and banking and financial services added over 1 lakh employees in FY’17 over the previous year. The biggest addition was done by TCS during the year as it added 31,380 employees. It was followed by Wipro that added 14,111 employees during the year. Among the banking sector ICICI Bank added 8,745 employees, while Axis Bank added 6,842 individuals to its workforce.