BSNL's VRS 2.0, 18,000 jobs on stake : Report

Bharat Sanchar Nigam Limited (BSNL), the state-owned telecommunications company, is reportedly preparing to introduce a second Voluntary Retirement Scheme (VRS) aimed at reducing its workforce by 35%, according to a report by The Economic Times. The Department of Telecommunications (DoT) is reportedly seeking approval from the Finance Ministry to roll out the initiative.

This development comes as BSNL faces financial challenges, with employee salaries accounting for a significant portion, which is  38% of its revenue. The company currently spends approximately INR 7,500 crore annually on wages and aims to reduce this expense to  INR 5,000 crore per year. The proposed VRS may affect between 18,000 to 19,000 employees, with a reported funding request of ₹15,000 crore to cover its costs.

BSNL’s Financial and Operational Landscape

BSNL has been grappling with financial difficulties for years, compounded by delays in rolling out critical 4G services nationwide. In FY24, the company reported revenue of INR 21,302 crore, reflecting a slight improvement from the previous year. Currently, BSNL employs over 55,000 staff members, including non-executives and executives.

This is not the first instance of BSNL implementing a VRS. In 2019, a government-approved revival package worth INR 69,000 crore included a similar scheme, resulting in 93,000 employees opting for early retirement. The ex-gratia payouts for that initiative totaled INR 17,500 crore. Subsequent revival packages in 2022 and 2023 allocated INR 1.64 lakh crore and ₹89,000 crore respectively, focusing on addressing financial stress, 4G and 5G spectrum acquisition, and infrastructure upgrades.

Uncertainty Surrounding VRS 2.0

While BSNL’s board has reportedly approved the VRS proposal, the plan is still being discussed internally. Approval from the Finance Ministry is awaited, after which the proposal will be sent to the Cabinet for final clearance as per the report.

Despite previous efforts to streamline operations and modernise its services, BSNL continues to face hurdles, including regulatory challenges in asset monetisation and delays in salary payments for its existing workforce. Experts suggest that a successful implementation of the VRS could strengthen BSNL’s balance sheet, improve operational efficiency, and accelerate its 4G rollout plans.

As the report is based on sources and remains unverified, it is essential to view the proposed VRS plan as speculative until official confirmation is provided. The potential workforce reduction underscores the pressing need for BSNL to balance fiscal prudence with its operational and modernisation goals.

Until then, BSNL’s journey remains closely watched as the state-run telco navigates its financial and operational challenges in a competitive telecom market.

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