Vodafone Idea lays off 1,500 employees to cut costs

Vodafone Idea Limited (VIL) has laid off nearly 1,500 employees from across the country in a bid to cut its costs. The move follows an earlier decision by the company wherein it consolidated its circles from 22 to 10.

According to a report by The Economic Times, Vodafone Idea has let go off around 1,200 - 1,500 permanent employees since May 2020 in a bid to cut its operational costs. The company, however, has paid severance package to all the employees who have been asked to leave. VIL has paid up to seven months of salary to some senior executives based on the exit clause in their contracts.

To others, which mostly includes mid-level and junior employees, the company has given severance packages based on their years of service in the company.

Vodafone Idea has told the Supreme Court that its total debt stands at ₹112,520 crore. This debt has prompted the company to opt for extreme cost-cutting measures. It has also stalled the company’s expansion plans.

The report says that the telecom gear vendors including Nokia, Ericsson, ZTE and Huawei are delaying taking order for 4G equipment from the cash-strapped telecom company fearing that they may not be able to recover their dues from the company. While Nokia and Ericsson have asked the company to provide some guarantee in the form of letters of credit from the banks, Chinese vendors, which primarily include Huawei and ZTE, despite having more flexible payment terms, have stopped taking new orders from the company. They have also delayed the delivery of new equipment.

In addition to this, the company is looking into the vendors that offer OpenRAN technology, which would not only allow smaller vendors to introduce their service but also the telecom operator to customise its service. This move will further help the company to cut its costs that telecos in India gear to introduce 5G services in the country.