Tata Motors Wants To Reduce Workforce By 50%; Offers VRS To 21,000 Employees!

Tata Motors Wants To Reduce Workforce By 50%; Offers VRS To 21,000 Employees!
Tata Motors Wants To Reduce Workforce By 50%; Offers VRS To 21,000 Employees!

In hopes to reduce cost, Tata Motors has offered a voluntary retirement scheme (VRS) to its employees for the third time in the last five years being part of its turnaround plan.

So far, there are a total of around 42,500 employees in Tata Motors, out of them, around half of the population is eligible for the VRS according to sources.

Who Is Eligible For This Scheme?

“The scheme provides an opportunity for permanent employees and workers to avail early retirement by drawing certain compensation and benefits” as per the sources.

According to the Chief Human Resources Officer, Ravindra Kumar GP, “The compensation and benefits being offered under the VRS are amongst the best in the industry and include health insurance as well as guidance on financial and retirement planning,”. 

“All permanent employees are eligible for the VRS’ and details of the application procedure, benefits and guidelines can be accessed through a link,” he added.

He said, “The details of the VRS scheme are being communicated to our colleagues in the plants in parallel,”.

Apart from this he also said that “Tata Motors continues to implement its turnaround plans effectively. Towards this, we are also reviewing our fixed cost structures while ensuring that our commitment towards employee welfare and well-being remains foremost,”.

For the application date, he said that “Eligible employees and workers can apply for the VRS from December 11 to January 9, 2021,”.

This Is Not the First Time

Prior to this, Tata Motors had announced VRS schemes in 2015 and 2017, although it did not opt for the same.

During 2017, the scheme backfired and many employees protested against it and only 300 employees opted for the VRS at the end.

So far, Tata Motors has a huge burden in terms of employee cost compared with many other companies in the sector according to the analysts.

Tata Motor Spends More On Employees

If we compare Tata Motors with Maruti Suzuki India, then it has around 30,000 employees (regular+contract) in total.

They also manufacture four-five times more vehicles than Tata Motors in the passenger vehicles segment.

Considering the expenditure, Tata Motors spends 8-10 percent of its cost on employees.

On the other hand, Maruti Suzuki spends only two-three percent, hence deriving better profit margins at the end.

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