Reliance Jio, the Indian mobile network operator, has laid off about 4500 to 5000 employees, of which about 500 are permanent employees and the rest are contractual. This is apparently part of Jio’s endeavour to cut costs.
While the Company denied having laid off staff due to financial pressure, it is reported that its operating margin in the first quarter dropped to 39 per cent while costs went up by eight per cent. The increased expenditure was attributed to operating and finance expenses, amortisation charges and depreciation.
Managers have been instructed to cut down on the team size, and these cost cutting measures are expected to go on.
The Company, on the other hand, maintains that its business is spreading and expanding, and that it will continue to recruit in large numbers. It clarified that many of its staff members are recruited through contractors for various time-bound projects, and that no employee has been terminated due to cost pressure.
While the Company has about 20,000 employees, a significant number of them are hired on contract through third parties.
In order to gain and expand its customer base, Jio had started off with a rather aggressive pricing strategy, all the while trying to expand its 4G network. According to experts, this is what has resulted in cost pressures. Jio’s average revenue per user (ARPU), fell to Rs 126.2 from Rs 130 in the previous quarter. Following the separation of its tower and fibre operations into two units, Jio’s net debt was reported to be about Rs 67,000 crore as on 31 March, 2019.