TATA Motors cuts surplus staff to gain competitive edge

Amid fears of massive job cuts in the IT sector, Tata Motors added another layer of turbulence in the job market. The company, in May, has slashed its managerial workforce by up to 1,500 people as part of an organisational restructuring exercise.


The objective of this layoff is to gain competitive edge again in the market by becoming cost effective. The squeezing market share is worrying Tata Motors and hence to gain back its market, there could be more job losses.  “First of all, this is not something which is done surgically. This is a result of huge organizational effectiveness project that we had undertaken. In the period of 2011-12 to 2015-16, we lost a lot of market share and we became a lot less competitive to what we were till 2011,” confessed Gajendra Chandel, chief human resource officer, Tata Motors to BW People.

“To gain competitiveness and become fiercely competitive it was necessary that we build on our capabilities, skills and productivity. We look at white collar productivity and how we can become far more effective. Basis this we did our restructuring exercise and as a result, some people have become surplus.”


Company has changed a lot of people across businesses, functions, locations, geographies etc. “This was also done to refresh the organization. These are on-going things in the industry. There is also a lateral attrition but ours is amongst the lowest in the industry today. For the last three years it has been falling and today we are much lesser than the industry average,” he said.


Slowing down of automobile industry is not a good sign. The industry is a capital incentive sector and is looked up as an indicator of economy’ health. In India, the automotive industry was growing at a very rapid pace till about 2007-08. In 2012-13, India experienced the highest industry volume and Tata Motors sold 800,000 vehicles.


Guenter Butschek, managing director and chief executive told reporters in Mumbai after announcing the company's earnings for the fiscal 2016-17, that, "The reference (total managers) on which we started (the exercise) was in the vicinity of 13,000...we do see as far as the white collar population is concerned, an overall reduction in the vicinity of 10-12% (up to 1,500)."


However, to make its staff competitive and efficient, company has undertaken several initiatives to train and re-skill. Moreover, Tata Motors is also training its dealers.  “At the end of the day our dealers who sell the products. When they are trained properly, dealers can sell 10-15% per person from the previous year. Hence, we are improving their productivity.”


With the coming of new job options such as in e-commerce, company has witnessed the interest of students plunging in joining automobile sector.  To boost the interest, company has tied up with several institutes across the country such as IIT Bombay, NIIT Jamshedpur, BITS Pilani, College of Engineering – Pune.


“We have observed that the manufacturing and automotive was becoming less clever.  More and more students wanted to join e-commerce companies. Then we decided to look at the mind-set of the students and faculties in the institutions, and that was the reason we went ahead and find the long-term partnership.”


It’s time to become future ready


Tata Motors is investing big time in reskilling the people. “These layoffs are ongoing in the industry and you must re-skill yourself if you want to sustain,” said Chandel.

For example -- In our product development area or engineering area, we have many good engineers. They come from various backgrounds and hence we evaluate the kind of skills they have, which are largely, mechanical and electrical.


The approach of being future ready tells the company that its need for tomorrow is largely electric. “So, we are running two batches currently and shortly will start the third and fourth batch as well. They will undergo our training program, because by the time they are done with their masters in engineering, the products that they are working on will be out in the market by 2020, 21 or 22. We skill them in line with the changing skill requirements of the industry,” he explained.  


Moreover, company puts its floor engineers through a graduate engineering program with colleges such as BITS Pilani and NIT Jamshedpur.  


Should we expect rewind of IT job losses in automobile?


Probably, no. “In the automotive industry, there will be a certain impact but the growth of the automotive industry will be able to take care of the fact that in the near future there will not be severe job cuts,” Chandel pacified.


However, the sector may not churn many new jobs. “It may happen the growth will not fuel the employment as much as it would have churned 10 years back.” However, there will be demand for newer skill sets.


Robots are good


Good news is that while robotics is a replacement for humans but skilled employees will be required to manage these robots. People will be required to program, maintain these robots. With this, you will be able to abstract better value from your products. And the trend is positive too. “If you take the example of paint shops, working here is harmful for the individual. So, automation and robotics helps us take away such harmful jobs from people.”


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