One of the renowned engineering and construction firms Larsen & Toubro has terminated 14,000 employees, representing nearly 11.2 percent of its total workforce during last three months from July to September. This is being reported as the biggest lay-off in the country so far. As Economic times report suggest that such move has been made by the firm in an attempt to “right size” its strength in the face of an economic slowdown and also because the digitisation of operations gave way to redundancies that in turn led to downsizing.
“The company has taken a lot of initiative to right size staffing in various businesses. The digitisation and productivity enhancement initiatives taken by us boiled down to redundancies of roles and we have been able to shed as a group 14,000 in the six months to September,” Chief Financial Officer R Shankar Raman said ET.
Raman referred to the lays-off as a “correction” and further added that this process of termination should not be viewed as a sequential event. Justifying the decision for retrenchment exercise, Larsen & Toubro also gave subtle explanation including the one we have mentioned above. According to the available reports, L&T has been encountering with customer staving off orders and falling oil prices, which is creating a ripple effect on the business conglomerate.
It also incurred losses owing to the inability to pass on cost escalation and some other issues. During the first half of FY17, the firm reported an increase in revenue by 8.6% to Rs 46,885 crore. Profits rose to Rs 2,044 crore from Rs 1,197 crore a year ago. Back in May this year, Larsen & Toubro Finance Holding, one of the company’s subsidiary had also given pink slips to over 550 employees in the wake of high cost and their poor performance in the business environment.
“If we believe that some business will take some time to get back to normalcy, it is important that we reduce under-recoveries. We are redefining roles and jobs which are redundant, we are allowing people to move on. It is across businesses,” said by Raman. “Financial services has defocused on certain lines of businesses and has let go a lot of people. Same is the case in minerals and metals.”
Well, those who are taking demonetization process under consideration for such retrenchment then you should keep them off from your thoughts as this firing process had started about 8 months ago. Nevertheless, massive cuts in workforce, at a time when the available data claims a faster growth of the country as compared to other markets is showing major fault-line in the economy. Read Business News.