The PTCL downsize

Pakistan has a slew of bloated and inefficient state entities that are either proposed as possible privatisation targets or ‘in process’ towards privatisation. One entity that has passed into the private sector is Pakistan Telecommunication Company Limited (PTCL) and it is reported that it is to offer half its workforce voluntary separation — redundancy by any other name. Up to 9,000 of its workforce of around 18,000 are being offered a Voluntary Separation Scheme (VSS) in a bid to bring PTCL into competitive line with other telecoms players in the market. This is the fourth time that PTCL has sought to cut its workforce since 2008 when a similar offer was made to 35,000 employees — and around 30,000 took the golden(ish) handshake — a clear indication if it were needed of just how overmanned the organisation was. In 2006 when the government sold off its 26 percent stake to Etisalat there were 64,000 employees.

The reason for the latest downsize is clear enough — the digital world has overtaken the analogue world that PTCL was set up to operate in. The fixed landline business that used to be its mainstay has gone into rapid decline with the advance of the mobile phone and other smart products. The older PTCL workforce are not educated or trained in the new technologies and the generation below them is, making sense for the company to recruit people that are familiar with today’s fast moving communications industry. The other factor is the cripplingly high cost of human resources. Around 35 percent of PTCL revenues are soaked up by the wages bill compared to a ratio of 12-15 percent in other telcos — unsustainable in a crowded market.

The business is currently making a profit, earning Rs8.8 billion in 2015 that was 69 percent higher than the previous year. A leaner more efficient workforce is going to allow that profit to grow, but is not going to be cheap in the short term. The model being deployed in PTCL could equally well be applied to Pakistan Steel or the national carrier PIA which is long sclerotic. A little political grit could go a long way.

Published in The Express Tribune, November 30^th, 2016.

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