VRS - the latest mantra

Alok Agarwal
14 October 1999

As I walked into Bank of India's south Mumbai branch at Express Towers, its reception wore an empty look. The receptionist was conspicuous by her absence. I later learnt that the lady at the reception had opted for the voluntary retirement scheme (VRS) introduced by the bank and the vacancy so created had not been filled!

About a month back a friend desperately pleaded with me for a small loan since his banker had not yet credited the proceeds of his salary cheque into his account. Reason? A work-to-rule agitation by the employees at one of the State Bank of India branches, where he had an account. This agitation had been brought about by employees who were forced to work more as a result of the vacancies created by those opting for the VRS remaining unfilled.

These are some of the examples of the kind of impact VRS is having on corporate India -- transforming a situation of over staffing in the pre-VRS era to a scenario of under staffing in the post-VRS era, yet helping organisations in their cost management exercises.

These incidents also indicate the change engulfing the "mindset" of decision makers in corporate India. In fact, implementing VRS has become like a 100 metres race. From private sector companies to public sector undertakings, each one is trying to beat the other in the race for initiating and implementing a VRS. And, this is a race in which some of the best-known names are participating. Reliance Industries, Rhone Poulenc, Sail, Tisco…these only form the tip of the iceberg.

The reason for this rush is very simple - to cut costs and remain competitive in a scenario where barriers are falling like ninepins and boundaries are breaking down. With globalisation fast becoming a reality and the world beginning to look like one single seamless market, survival of the fittest has become a fact of life.

Indian companies now compete with cheaper products coming through imports. Suddenly reality has dawned upon them that to survive, cost management will become an imperative. Naturally, bloated wage bills got the first axe.