Anil Ambani-led Reliance Communications plans to cut 37% workforce by month end

KOLKATA: Anil Ambani-headed Reliance Communications 1.22 % (RCOM) plans to slash 37 per cent of its 15,000-strong workforce by the month-end by outsourcing its call centre and sharedservices operations in a bold restructuring move aimed at exiting non-core businesses and cutting costs to boost profitability.

India's fourth-largest telco will shortly ink deals worth a total of nearly Rs 700 crore with two thirdparty service providers to outsource its BPO and shared services operations, which will result in some 6,000 employees exiting RCOM's rolls.

Nearly 4,500 of them are currently involved in RCOM's call centre operations while the rest make up its shared services teams. After the outsourcing deals are finalised, "these 6,000-odd employees will migrate to the rolls of the two third-party service providers, which will lower RCOM's employee count to well under 10,000," a top company official told ET. He declined to name the two companies on "confidentiality grounds".

"The BPO and shared services businesses were highly inefficient and not adding any value to RCOM's bottom line, which is why we decided to outsource them and purely focus on core telco issues like customer acquisitions, sales, distribution, marketing and brand building to create a leaner organisation that is more cost-efficient," the official said.

Outsourcing these functions will trigger "nearly Rs 200 crore savings in RCOM's annual staff salary bill alone," said another company executive with direct knowledge of the matter. An RCOM spokesperson declined to comment.

High costs, mostly related to debt taken to acquire bandwidth and fund expansion, have been weighing on profit for some years now. Its debt will stand at around Rs 34,000 crore after it repays some Rs 6,100 crore raised by issuing shares to institutions and warrants to promoters recently. RCOM has also been trying to pare debt by initiating talks to sell its international and direct-to-home TV businesses and by monetising real estate holdings.

The attempt to cut staff costs — Rs 307.3 crore in the January-March quarter, up fromRs 250.8 crore in the previous one and Rs 213 crore a year ago — is aimed at complementing sales efforts. These will be the second wave of RCOM's outsourcing deals.

Last year, it signed a total $2 billion of deals with Sweden's Ericsson and France's Alcatel-Lucent to outsource its pan-India network management operations to optimise resources and cut costs.

The latest outsourcing and staff reduction drive is being anchored by chief executive Vinod Sawhny and human resources head Amit Das. The decision to outsource BPO and shared services operations also stem from the fact that both are support functions and cost centres that scarcely generate any revenue for RCOM.

While most of RCOM's BPO teams operate from Dhirubhai Ambani Knowledge City (DAKC) near Mumbai, its near 1,500-strong staff handling shared services functions such as billing, collections, administration, security and maintenance are scattered across India.

Since nearly 3,500 people operate in the call centre at DAKC, RCOM is likely to explore ways to monetise the freed-up office space once they leave over the next six to nine months, company insiders added.

The Reliance Group company has reportedly set in motion plans to monetise its pan-India property holdings to raise Rs 5,000 crore, which it will use to reduce debt. RCOM's plans to sell its global, wireline and DTH businesses apart from monetising its real estate holdings to nearly halve debt over the next two-three years, according to a person with knowledge of this.