Telecom sector starts cutting jobs

[LahoreEstate]

Mobile operators deny retrenchment

Sunday, February 15, 2009
By Jawwad Rizvi

LAHORE: Pakistan’s telecom sector, which flourished during the last five years and created numerous highly paid jobs, is now feeling the heat of economic crisis and has started laying off employees.

This is not surprising as international telecom industry is already cutting jobs to cut their operational costs as worldwide recession strikes many countries. Both mobile phone manufacturers and cellular service providers are slashing their staff in the wake of declining profits.

The International Labour Organisation in its 2009 report has expressed concern that under the present label of global recession 20 million jobs would be wiped off by the end of this year. However, if the recession further deepened, in the worst case scenario, the reduction in jobs could touch 50 million, an eye opener for Pakistan as well.

The same thing has started happening in Pakistan also. Though there is no mobile phone manufacturing company, sales offices of almost every manufacturer are operating here. Cellular service providers are also facing numerous difficulties to maintain their cost in a scenario when new investments are not forthcoming and Average Revenue Per User (ARPU) has been declining every passing day.

The News has found that different cellular service providers had recently laid off their employees. Industry sources revealed Mobilink, having the largest customer base, cut jobs from the administration and security department. The company removed its permanent employees in a bid to cut operational costs.

Similarly, UAE-based company Warid has terminated the services of over 250 employees from its sales and marketing departments while China-based company Zong has laid off some 30 people from its sales department. The company had shown the door to sales team officials of Lahore, Faisalabad, Multan and Bahawalpur.

However, representatives of all cellular operators denied there was any job cuts in their companies and said they had no plan to lay off staff in the near future.

Telecom sector people said no new investments had been pouring in the industry due to economic crisis. Besides that, a price war among the operators has started which has reduced profit margins. Similarly, ARPU has dropped to $2.7 from $9 in 2004 because of economic downturn which is also a big blow to the sector.

Director Sales Zong Berkat Ullah talking about job cuts in the company said there was no lay-offs in the south region of the company. However, “I don’t know about job cuts in sales department of the central region,” he added.

On the issue of price war, he said for a consumer price war was beneficial. “The company has entered into a cut-throat competition and creating troubles for others.”

Director People Excellence Telenor Pakistan Haroon Bhatti, responding to The News queries, said the company had not planned any job cuts. “We have planned our workforce carefully and are a lean organisation. Hiring people on short-term goals and then laying them off is a painful process. Telenor do everything in its capacity to avoid a situation of cutting jobs,” he added. He further said the company had not shed any of its staff and not planned to do so in the future. Haroon Bhatti said the global economic slowdown was having an impact on business world-wide. However, through prudent hiring and by keeping long-term business in view, “we don’t have to lay off people.”

Ufone spokesman Moazzam Ali Khan said the company had always been a very efficiently managed organisation and therefore had never built any fat in any area. “We therefore do not plan or foresee any job cuts and has not shed any staff so far.

“Pakistan’s telecom industry has been impacted by the international economic crunch because of its reliance on international technology and vendors,” he said, adding “we are, however, getting more affected by local inflationary pressures and taxation changes.” He said, “for the first time in the last 19 years this industry has seen a contraction in the size of subscribers and pressure on revenues and costs is becoming a worry for all the players.”

Similarly, Mobilink spokesperson rejected the notion of job cuts during the last six months. “The global economic crunch and overall inflationary trends have affected the entire economy and the telecom sector is no exception. However at Mobilink, our employees are our greatest asset. Our strong value and support system when it comes to looking after our employees is what has earned us the Most Preferred Telecom Employer 2008,” she said.

However, Warid spokesperson opined that the situation had worsened the world over due to the economic crisis but the same was not reflected in Pakistan’s economy because the country’s market dynamics were different from developed nations. “In future no job cuts will take place in Warid, however cut in the revenue of telecom industry is reflected in the planned or current downsizing of surplus employees in some companies,” she added.

http://thenews.com.pk/daily_detail.asp?id=162615