Larsen and Toubro, popularly known to the masses as L&T, is one of India’s largest engineering conglomerates. On Tuesday, the company topped analyst estimates to report its quarterly earnings. But the amazing order book values were accompanied with an unexpected move of getting rid of a whopping 14,000 employees over a period of half year, reports Economic Times.
These layoffs, which account for over 11 percent of its entire workforce, are being attributed as one of the biggest corporate retrenchment exercises. This move comes on the heels of a restructuring process, which has been undertaken in an attempt to reshape under-performing businesses and bring them to the ‘right size.’ The jobs cuts weren’t concentrated to any particular business but were spread across multiple sectors.
Commenting on the same, R Shankar Raman, Chief Financial Officer at L&T, said,
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.
Raman also suggests digitisation of its businesses as one of the primary reasons for the rampant layoffs in the recent months. The company is also facing some stress in operating its business across sectors such as minerals, oil and financing. The company hasn’t specified the exact number of people removed from each division but Raman did say that it had to sack a lot of people.
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,
The workforce reduction is an effort on L&T’s part to bog down on orders from the government, which have picked up pace as compared to private ones. This move from the company is also an effort focused towards staying agile, relevant and cost-competitive in today’s rapidly evolving economic scenario. The company wasn’t interest in carrying forward the burden of employees incompetent in budding and other currently ubiquitous technologies.
Commenting on the decision, SN Subrahmanyan, deputy MD and president at L&T, added,
We’ve got to look at it linearly, to see how to move up the value chain. Certain employees that were relevant at some point in time are not relevant anymore, the technology is changing. we are moving into some amount of automation and digital for some of our common services.
The verticalization process has resulted in a different way of looking at processes. There are certain low performers which we were taking along and we had to take a relook at it because in a competitive world we need to be agile and smart and move forward.
Thus, the company had recently acquired Pune-based analytics startup AugmentIQ Data Sciences. The startup offers IP-based, big data and analytics solutions that help enterprises derive business benefits from insights into their massive amounts of collected data. Therefore, the company is finally embracing future technologies and entering the second phase of its growth.