Will an exit policy help revive telecom hiring?

If you are looking for a job in the telecom space, brace your self for some rough weather as telecom hiring is heading southwards.

With consolidation talks doing the rounds in the telecom space, hiring in the sector has taken a hit due to rising costs and tight margins.

According to a report in the Economic Times, telecom hiring has reduced by 70 percent, with players enforcing a freeze on hiring, except for strategic positions.

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Telecom companies, both existing players -Vodafone, Airtel, Idea, TataTele and Reliance- and new entrants like Loop Telecom and Unitech are downsizing due to stiff competition, high infrastructure cost and tight margins.

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According to a study by Teamlease, India Inc is cautious about hiring till January 2012. The study said that even though India reported the strongest hiring plans globally since the third quarter of 2008, employers are still cautious and are placing stronger emphasis on skills and employability.

After having suffered at the hands of the falling US and European economies, telecom companies have become much more cautious about strategy and execution. Moreover, there is an apparent talent deficit in comparison with the business growth that is transforming the IT sector.

Says NS Rajan , Partner and Global Practice Leader, Ernst & Young, in an article, “Of the 450,000 annual engineering graduates in India, just 25 percent are considered employable by companies in the IT/ITeS industry.”

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Recently the Tatas merged their CDMA and GSM divisions. Airtel compromised around 2,000 jobs by going in for comprehensive restructuring, while Reliance, Idea and Vodafone are not even filling existing vacancies.

According to the ET report, marginal hiring is visible only in areas like network, routers and towers. Hence manufacturing firms like Huawei, Nokia Siemens and ZTE Ericsson, which concentrate on product development and laying networks for 3G services, are the few companies that are upbeat on the hiring front.

New players have been demanding an exit policy as they are feeling trapped after investing huge funds in their circles. Virgin telecom, for instance, has already exited. Loop Telecom and Videocon venture Datacom are also eyeing exits.

Even the government is of the view that consolidation is inevitable due to the overcrowding of players in many circles. Once consolidation comes into effect, the number of players in each circle will ideally come down to three-to-four, from the current 13-14.

While an exit policy will allow for more optimistic expansion, it is unlikely that lobbying or wrangling over clauses will be a quick and easy stage. The exit policy should typically allow telecom companies to exit or sell out their licenses and at times even speak to labour laws. In a sector that has come under extreme cost and infrastructure pressure over the last few years, haste in formulating an exit policy would be welcomed by not just job seekers but corporates as well.