Reliance lays off 11% of its workforce, totaling 42,000 employees

• Mukesh Ambani is again making headlines…not because of spending over INR 5000 Crores on his son’s wedding. Then why?
• Reliance Industries, India’s largest conglomerate cut its workforce by 11% in FY24 – that is 42000! 
• What does this indicate about the broader economy?

What is happening at RIL?

Reliance Industries Ltd. (RIL), India’s largest company by market value, recently reduced its workforce by a staggering 42,000 employees, as reported by The Economic Times.

According to RIL’s latest annual report, the company’s workforce decreased from 3.90 lakhs in FY23 to 3.47 lacs in FY24.

Segment that is affected by the layoffs

Retail, which accounts for 60% of RIL’s total workforce, took the hardest hit – Employee numbers dropping from 245,581 in FY23 to 207,552 in FY24.

A key factor in this downsizing appears to be their offline store closures and a slowdown in expansion.

This contraction in headcount raises questions about the future trajectory of RIL’s retail ambitions.

Also read: Layoff frenzy at Citigroup: CFO Mark Mason announced 20,000 job cuts globally. Here’s what you need to know

Reasons behind the layoffs?

Slower expansion in retail

Despite this, RIL’s retail division continued to expand its physical presence, albeit at a slower pace.

The company added over 800 new stores, bringing the total store count to 18,836 by the end of FY24.

This was a significant drop from the 3,300 new stores added in FY23, indicating a more cautious approach to expansion.

Cost-efficiency drive

The massive reduction in employee numbers is primarily attributed to a cost-efficiency drive within the company.

Business’s strategic maturity

Analysts believe that RIL’s workforce reduction is a reflection of the company’s strategic maturity and the growing support from digital initiatives.

This statement suggests that while the reduction in workforce may appear concerning, it is part of a larger strategy to streamline operations and enhance efficiency.

The analyst added that this doesn’t necessarily mean the headcount won’t increase again when new business opportunities arise, emphasizing RIL’s expertise in driving cost management and efficiency.

Impact on Reliance Jio

Reliance Jio, the conglomerate’s telecom arm, also saw a reduction in its employee count – from 95k in FY23 to 90k in FY24.

New hirings

Notably, the intake of new recruits was slashed by more than a third, with only 171,116 new hires compared to the previous year.

Also read: Yes Bank layoffs 500 employees: Branch Banking hit the hardest, more job cuts likely

What people are saying

Shaadi.com founder Anupam Mittal took to social media to describe the 42,000 job cuts as “alarming” and questioned why this significant development has not garnered more attention in economic and political circles.

He mentioned that with an estimated 8-10 million new jobs needed annually, the reduction in workforce at one of India’s largest companies could signal a deeper challenge.

Some people on Twitter are also bashing Ambani for cutting jobs whereas they spent over INR 5000 Crores on their son’s wedding.

Wrapping up…

The workforce reduction at Reliance Industries Ltd in FY24 is a multifaceted issue.

While it reflects the company’s strategic efforts to streamline operations and enhance efficiency, it also underscores the need for a robust plan to address the country’s employment needs.

What are the underlying reasons and potential impact on the broader economy?