Voluntary Separation Scheme: --an Analysis of Downsizing plan of PTCL

PTCL Management always demonstrates special care towards employees future. With this in view, we are
pleased to introduce a very rewarding scheme, offering handsome package to the employees. PTCL
Management, giving special consideration to employees future and prosperity, has come up with a
lucrative package designed for the people.

Syed Mazhar Hussain, the senior executive vice-president of the companys human resources
division, said the apprehensions were ill-founded. No one was being pressurized to opt for VSS
which was purely a voluntary scheme designed to ensure long-term welfare and well-being of the
employees and their families.
He confirmed that a surplus pool had been created to place inefficient and redundant
employees who would be imparted training as part of their career planning. He said the VSS was
offered to over 15,000 of the around 26,000 employees.
PTCL Company in Pakistan:
Over the years, technology has changed the concept of communication and what was thought to
be a fictional only a decade ago, has actually made its way through to our hands today. This is
the future we dreamt of so fondly. Welcome to the modern age of telecommunication, which
have become complementary to our lives. But there must also be an anchor to introduce, allow,
improve and channelize all these services and innovations sweeping through the globe.
In Pakistan same anchor is Pakistan Telecommunication Company Limited from the humble
beginnings of posts & Telegraph Department in 1947 and establishment of Pakistan Telephone &
Telegraph Department in 1962, to this very day,
In 1995, Pakistan Telecommunication (Reorganization) Ordinance formed the basis for PTCL
monopoly over basic telephony in the country. The provisions of the Ordinance were lent
permanence in October 1996 through Pakistan Telecommunication (Reorganization) Act. The
same year, Pakistan Telecommunication Company Limited was formed and listed on all stock
exchanges of Pakistan

PTCL launched its mobile and data services subsidiaries in 2001 by the name of Ufone and
PakNet respectively. None of the brands made it to the top slots in the respective competitions.
Lately, however, Ufone had increased its market share in the cellular sector. The PakNet brand
has effectively dissolved over the period of time. Recent DSL services launched by PTCL reflect
this by the introduction of a new brand name and operation of the service being directly
supervised by PTCL.
In 2005, Government of Pakistan decided to sell 26 percent of this company to some private
corporation. There were three participants in the bet for privatization of PTCL. Etisalat, a Abu
Dhabi based company was able to get the shares with a large margin in the bet. Government's
plan of privatizing the corporation was not welcomed in all circles; countrywide protests and
strikes were held by PTCL workers. They disrupted phone lines of institutions like Punjab
University Lahore along with public sector institutions were also blocked. Military had to take
over the management of all the exchanges in the country. They arrested many workers and put
them behind bars. The contention between Government and employees ended with a 30%
increase in the salaries of workers. Now PTCL is a story of commitment and vision.

Downsizing Scheme View:

It is a historical day in the sense that Pakistan Government sold 26 percent of the PTCL shares,
earning handsome revenue of Rs. 2.6 billion, which would enhance the telecom sector and
encourage further investments. After lapse of five years, the plight is utterly contrary and the
company and its employees have been suffering severe situation since the privatization of PTCL
management. Neither the jobs of the employees are safe nor could PTCL retain its growth in
revenues and profit.
Dr Hafeez reflected that, assured staff on record that no employee of PTCL would be replaced or
retired, and their welfare would be well looked after. But the very next year thousands of
employees were sent home by the new management in very next years in the name of VSS.
PTCL total workforce is used to stand at 64,000 employees before 2007, comprising of 56,000
regular and 8,000 contractual. In 2007, more than 40,000 people got retirement from their
employments through Voluntary Separation Scheme (VSS). Presently there are more than 15,000
regular employees and 5,000 contractual who have been shifted their status from regular to

contractual on insist of the management. The sitting government is very much concern about the
PTCL privatization and termed the process as violation of the rules and producers of
privatization commission of the country.
Now we still offering that scheme, but our employees perception are quite different. They have
much bitter feeling about these downsizing schemes. Thousands of Employees who opted this
offer had darkened their future. They had lost the VSS money due to their poor experience in the
fields of today businesses.
PTCL employees are discussing widely this VSS scheme. This is 3rd Voluntary Separation
Scheme in the Pakistan largest ICT services provider. In 2006 Government of Pakistan sold 26%
shares to UAE based telecom. Firm, Etisalat First retirement scheme was launched on November
15, 2007 and it was completed in June, 2008. Second employees retirement scheme was started
in July, 2012. Almost 40,000 regular and NCPG workers had opted to quit PTCL in last two
downsizing schemes.

Citing a reason for the employees' interest in the VSS:

Most of the employees were of the view that those who were not availing themselves of the
scheme would repent at the end of the day, as the organization would eventually bring them
(remaining employees) to the contract-system employment, they said.
The PTCL Union Action Committee office-bearers, Sabir Butt and Abdul Qayyum told Dawn
that the (foreign) management had vested interest and the purpose of downsizing was actually to
promote another company which belonged to its country.
They said the management was not spending much on improving its infrastructure and in the
absence of such a large number of 'technical' staff the subscribers would suffer the most. They
said the profit of the company had reduced drastically after this management took over last year.
They said under the VSS, the pension and medical facilities were given to only those employees
who had served the organization for more than 20 years while the others would get a 'small
financial package' considering the high rate of inflation.

It also alleged the privatization was not a fair and transparent deal. But the government is
reluctant to bring the responsible people into accountable as everyone knows the then minister of
the privatization was the same person, who is now the minister of finance of the present
government.
Minister for Information Technology and Telecom Dr. Abdullah Riaz stated this while reiterating
that the decision of Cabinet Committee on Privatization and PTCL Board of Directors is very
clear in this regard.
The Minister emphasized that the government is fully cognisant of PTCLs employees concerns
regarding the scheme, and the aim of VSS is to offer an attractive scheme to employees and at
the same time, to help improve its operational efficiency.
Accordingly, he said that the scheme would offer attractive package to the employees and it
would be ensured that the PTCL management inculcates confidence amongst the employees
regarding the benefits of the scheme and its voluntary nature. He further said that the PTCL
employees would be guided through workshops on safe and secure investment opportunities.

Success of VSS in PTCL :

PTCLs (VSS) Voluntary Severance Scheme which was introduced on 26 July 2012 and
concluded recently on 31 August 2012 has been a tremendous success amongst the employees.
The VSS was offered as voluntary scheme that gave the employees a golden opportunity to opt
for this offer and gain financial benefits. A great majority of the employees voluntarily opted for
this scheme.
Senior Executive Vice President (SEVP) HR, Mazhar Hussian stated that the scheme achieved its
desired objectives. The scheme provided a unique window of opportunity to the employees by
offering a them the option to choose better future for themselves and their families. To remain
competitive in the telecom sector, it is imperative to keep costs to the minimum while providing
the best possible services to the customers.
Which changing time and highly competitive telecom sector environment, PTCL has
transform as IT service provider which this change pool of employees whose skills set, age and
education are not aligned with the company current and future goals.

Senior Executive Vice President Human Resource (HR) PTCL, Syed Mazhar Hussain, said
addressing a press conference. The VSS offers an attractive package and aims to scale down the
PTCLs human resource cost and to bring it in line with international standards, he said.
Hussain, who was flanked by PTCLs Senior Vice President Naveed Saeed, and other high-ups,
said that the company plans to reduce its human resource cost to 10 percent of its revenue from
the current 22 percent in line with the international standards and a level already obtained by
other competitors.
The PTCL would offer VSS to 9,500 employees in the redundant categories, while 6,500 to the
contractual employees, he said. The PTCL management expects to get applications of 6,000 to
7,000 under VSS, but it would not affect its operation, he added.
KARACHI: Farooq H Malik, executive vice president, HR Pakistan Telecommunication
Company Limited (PTCL), has said that the current voluntary severance scheme (VSS)
offer has been a success and it shows that the employees fully trust and endorse the
management, said a statement.
On the insistence of employees, the date to submit application of PTCL VSS has been extended
till September 27, he said.
He also said that a few miscreants have been lodging unreasonable petitions in various courts.
None of the petitions have been maintained by any court so far, which is a clear sign that the
steps taken by the PTCL administration are as per the law.
Today the Lahore High Court has dismissed three different petitions against Pakistan
Telecommunication Company Limited (PTCL) voluntary severance scheme, he said, adding that
of these, two petitions were filed by Lines Staff Union, while a third petition was filed by an exemployee Rana Muhammad Hassan.
The petitioners requested the court to halt the VSS as well as internal transfers and postings of
PTCL. The court dismissed the request for immediate halting of transfers and postings,
adjourning the case till October 24, he said.

Failure of Voluntary Separation Scheme:

Syed Mazhar Hussain Chief Human Resource Officer PTCL said, This scheme is highly people
centric. Being a responsible Company, we always consider our employees welfare, the first and
foremost priority.
(Oct 29th, 2014)
PTCL employees has experience of two such scheme earlier. They have much bitter feeling
about these downsizing schemes. Thousands of PTCL Employees who opted this offer had
darken their future. They had lost the VSS money due to their poor experience in the fields of
today businesses.
On the other hand PTCL employees especially working on regular (BPS) terms of services has
lost many more in previous 7 years. They are still working on the pay scale of year 2008. While
Government of Pakistan had revised Basic Pay Scale in 2011 also. PTCL management refused to
give 2011 pay scales to its regular workers. Due to this discrimination they are working on the
least basic pay.
it is worth mentioned here that Calculation of Pension, Rest and Recreation Allowance, Annual
Bonus, House Building Advance and other benefits, depends on employees Basic Pay.
Today lot of PTCLs employees are thinking to quit this company, But they are still in trouble to
decide, whether they should opt VSS or not. Disappointment within the PTCL is very high. If
they think to get vss then the conditions of vss optees of 2008 and 2012 are also disappointing
for them.
Growth rate of Voluntary Separation Scheme:
The telecom giants landline subscriber base grew 2% in 2012, largely due to the fact that the
landline is a prerequisite for the companys highly popular broadband internet services.
On a consolidated basis, PTCLs profits jumped 23% to Rs2.7 billion in the period under review.

Furthermore, consolidated revenues were also up 7% to Rs29 billion, while gross profit grew 4%
to Rs9.6 billion; however, higher selling and administration expenses of Rs6.2 billion countered
the impact of climbing revenues and margins, reducing the operating profit (excluding the
Voluntary Severance Scheme (VSS)) by 9% to Rs3.4 billion.
Ufone PTCLs wholly-owned cellular subsidiary currently accounts for about 47% of the
companys consolidated revenues and seems to be a sector with huge growth potential.
However, PTCLs hefty quarterly profits transformed into losses of Rs8.3 billion due to the
booking of the VSS expense of Rs11 billion.
The VSS had been announced in July. The Express Tribune had quoted PTCL Senior
Executive Vice President Syed Mazhar Hussain as saying that the companys human resource
cost is 22% of total revenues, while this ratio in other telecom companies was below 10%
making it difficult for the company to compete in the market. The VSS expense cost Rs11 billion
to the telecom operator, and lead to the redundancy of 16,000 employees almost 53% of its
30,000-strong workforce. Since the government has 74% shares in the company, the maximum
cost will be borne by the government.