Namrata Singh | TNN | Updated: Dec 10, 2018, 11:26 IST
MUMBAI: In the world of business, if there’s one trend that has stood out and is making people jittery on the jobs front, it is consolidation. Beginning with the mega merger between Vodafone and Idea Cellular last year, the trend has further accelerated this year following the coming together of Walmart and Flipkart, and the proposed deal that will see GSK Consumer Healthcare amalgamating with Hindustan Unilever.
A merger between similar businesses can result in redundancies and an oversupply situation than can impact the bargaining power of candidates. While consolidation makes good sense on the financial front, the same may not augur well for jobs.
Siddharth Reddy, MD & CEO of BI Worldwide India, a global employee engagement and recognition solutions provider, said, “Given the spate of consolidations over the last two years, there could be job losses in the range of 7-20%, depending on how identical the businesses are. It could impact compensation levels if the supply exceeds demand and this is driven by market forces. However, it would also depend on the sentiment of growth in the economy, which is unpredictable right now.”
Other M&As over the last two years include Bharti Infratel-Indus Towers as well as Bharti Airtel-Tata Teleservices & Tata Teleservices Maharashtra (consumer telecom business), taking the total value of deals in domestic mergersand internal restructuring, according to Grant Thornton, to around $44 billion since 2017.
Reddy said cross-border deals seldom see job losses. However, when there are identical businesses that get consolidated, redundancies come up. “Job losses then become inevitable as several positions are common and companies look to drive efficiencies and economies of scale with common brand messages. This was the case in Myntra-Jabong,” said Reddy.
There’s always a bit of uncertainty when M&As happen. “They unnerve people,” said Ronesh Puri, MD of Executive Access India. “When there’s a new ecosystem in place, there are adaptability issues that lead to job losses. But apart from that, a flight of talent takes place even before an M&A comes through,” said Puri.
Sunil Goel, MD of recruitment firm GlobalHunt, said while such M&As may not depress the job market, they would certainly reduce bargains. “One person has at least four opportunities in hand today and he/she selects the best one. This situation could change with more people entering the job market,” said Goel. He added that such consolidations usually have a major impact on people employed in last-mile jobs, that is, the salesforce.
Such an impact could come with a time lag when FMCG firms consolidate and integrate their distribution networks. However, given that there is a shortage of trained resources, Goel said talent from the FMCG salesforce can get easily absorbed not only within the same sector but by other sectors as well.
On the flip side, while more people would be looking out for jobs, it would offer an opportunity for other companies to get this talent that was not available earlier. Whether or not this could have a negative impact on compensation, according to Puri, would depend on the talent and the job situation. “Employers certainly tend to negotiate harder, which will be the case now as well, but that does not mean it is all over for candidates. If they have a good record to show, they will leverage that experience and can have a good bargaining position. Companies are always on the lookout for exceptional talent,” said Puri.
The spate of M&As indicates there could be further consolidation in mid to top levels across sectors. “I see it as the beginning of a trend and it will only accelerate further,” said Puri.