Reliance Jio has laid off 500-600 permanent employees and nearly 4,500 contract workers

Mukesh Ambani-led telecom venture Reliance Jio has sharply reduced the number of contracted employees, along with some permanent staff, as the company strives to cut costs and improve operating margins. 

The Economic Times citing sources familiar with the matter said the company has asked nearly 5,000 staff to leave including 500-600 permanent employees. However, the publication could not verify this number independently.

Reliance Jio, however, said that it continues to be a net recruiter and there was no question of any "cost pressure-led action".

Reliance Jio, however, said that it continues to be a net recruiter and there was no question of any "cost pressure-led action".

Worth mentioning here is that Jio's operating margin fell in the January-March quarter by 5 basis points on quarter to 39% while its total expenses rose by almost 8% sequentially, on the back of higher network operating costs, finance expenses and depreciation & amortisation charges.

The ET report citing an analyst said employee costs typically range 5-6% among telecom operators and companies working to control costs tend to drop the axe first on the workforce.

The source mentioned above told ET that major redundancies have been on the consumer-facing side, other impacted areas include supply chain, HR, finance, administration and networks.

“The impact has been mostly in the customer-acquisition segment,” the ET report quoted one of the people as saying. The manpower rationalisation started at least a quarter ago, and the cost-tightening is expected to continue. “Managers have been told to reduce team sizes. The areas that are getting impacted are administration, supply chain, finance and HR,” another person told the business daily on condition of anonymity.

However, a Jio spokesperson told ET, "We are expanding our consumer businesses and Jio continues to be a net recruiter in the industry. We also work with contractors who may be hiring staff on fixed time contracts for our various project construction activities. Given we continue to recruit actively, the question of a cost pressure-led action is not relevant.”

According to the ET report, Jio has 15,000-20,000 employees on its payrolls but actually, a much larger number of people work for the telco as third-party employees. Third party employees are hired by a staffing firm which in turn gets payment from the company for which these employees work.