India’s largest conglomerate, Reliance, announced an 11% reduction in its workforce, laying off 42,000 employees. According to Livemint, most of these employees were either contract workers or part-time employees. The company also hired 33% fewer fresh recruits than the previous year. RIL has recruited merely 1.17 lakh new recruits in this fiscal year. These changes might seem to be a strategic business decision, but there can be more to it.
This major workforce reduction majorly happened in the RIL retail division, which contributes to 60% of the company’s total workforce. In FY 2023, the company’s retail division had 2.45 lakh, which now dropped to 2.07 lakh in FY24, sparking concerns regarding the health of the Indian economy. According to Anupam Mittal, founder of Shaadi.com, this is an alarming situation for India’s job market. He further added that the country already needs 8-10 million new jobs every year, and these job cuts from major conglomerates will make the situation worse.
Does It Indicate Economic Meltdown?
These sharp job cuts are accompanied by store closures and slow retail store growth. In FY23, Reliance inaugurated over 3,300 retail stores; however, this number fell drastically in FY24. In the current fiscal year, the company added only 800 new stores, bringing its total to 18,836. Further, the telecom division of the company also experienced a workforce reduction, falling from 95,326 in FY23 to 90,067 in FY24.
These might be done to improve the overall efficiency of the business, but they may also indicate certain underlying economic problems in the country, especially in sectors like retail that heavily rely on consumer spending and economic stability. Reliance must have assessed the market condition or the changes in consumer behaviour that prompted them to bring shifts in their strategy.
However, on the contrary, an analyst of the leading brokerage mentioned to ET reporter, “The new lines of businesses (at Reliance) have matured now and have significant support from digital initiatives. Now, they are at a stage where they can better manage operations with optimum strength. It doesn’t mean that the numbers (of headcount) won’t increase when new business opportunities emerge and strategy changes. They understand very well how to drive cost management and efficiency.” This makes it quite hard to tell whether there is an incoming economic meltdown or just a strategic shift.
