L&T restructure: Company reduces workforce by 11%
India’s largest engineering and construction group Larsen and Toubro (L&T) has reduced its workforce by 11% -- a total of 14,000 jobs were cut in the months of July to September this year, according to various media reports.
This was done to reduce the under recoveries as businesses which are not in shape needed to be right-sized in order to get back to normalcy. The company has been restructuring the roles and responsibilities which were found to be redundant. R Shankar Raman, Group Chief Financial Officer said that the job cuts have not been concentrated in any particular sector; it’s throughout all services, although financial services sector saw the maximum reduction.
R Shankar Raman said at a conference on Tuesday to announce the company’s Q2 financial earnings, “Businesses which are not in shape, we are trying to right size (them). If we do believe that it is going to take some time for businesses to get back to normalcy, it is important we reduce the under recoveries. So we are redefining the roles and responsibilities which were found to be redundant.”
The company expects that the economic environment will remain in flux in the future and Raman mentioned that these retrenchments exercise is not a recurring plan but it is a ‘correction’ by the company. He also mentioned to a publication that the company has taken a lot of initiative to right size staffing in various businesses. The digitisation and productivity enhancement initiatives taken by the company boiled down to redundancies of roles.
According to ET report, L&T has been facing challenges with customers deferring orders and falling oil prices contributing to a sharp slowdown in the Middle-east, one of its biggest bets. Competition has increased in domestic market as companies fight for a shrinking order book pie. It also incurred losses due to inability to pass on cost escalation and other issues. In the first half of FY17, its revenue increased 8.6% to Rs 46,885 crore. Profits rose to Rs 2,044 crore from Rs 1,197 crore a year ago.
“It is important that we stay agile and cost competitive in these tough times. So, we are also looking at corporate functions and all other initiatives,” Raman said.