Dr Reddy's Implements 25% Workforce Cost Reduction and Layoffs of High-Salary Employees
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Synopsis
Dr Reddy's Laboratories is reportedly reducing workforce costs by 25% and laying off employees earning above Rs 1 crore annually. This move is part of the company's effort to enhance operational efficiency and may impact around 300-400 employees.
Key Takeaways
- Dr Reddy's reducing workforce costs by 25%.
- Layoffs affecting employees earning over Rs 1 crore.
- Voluntary retirement for employees aged 50-55.
- Potential annual savings of Rs 1,300 crore.
- Impacting 300-400 employees across sectors.
New Delhi, April 14 (NationPress) Pharmaceutical giant Dr Reddy's Laboratories is reportedly slashing its workforce expenses by approximately 25 percent, which includes laying off personnel whose annual earnings exceed Rs 1 crore, as per various media sources.
The organization has also extended an offer for voluntary retirement to employees aged between 50-55 in its research and development sector.
According to reports, several high-earning staff members across different divisions have already been urged to resign.
This decision is part of the company's ongoing strategy to enhance operational efficiency.
IANS reached out to Dr Reddy's for comments but has yet to receive a response.
This substantial reduction initiative appears to be a reaction to potential underperformance in new projects, including an expansion into nutraceuticals through a partnership with Nestle and ventures into digital therapeutics, alongside new product launches.
Moreover, there are expectations of a potential closure of the therapeutics division and further downsizing in the nutraceuticals sector. Reports suggest that this move could affect around 300-400 employees.
Importantly, a 25 percent cut in workforce costs could lead to annual savings of about Rs 1,300 crore.
In Q3 FY25, Dr Reddy's reported consolidated employee benefits expenses totaling Rs 1,367 crore, marking a 7 percent increase from Rs 1,276 crore in Q3 FY24.
During FY23-24, the company onboarded 6,281 employees and allocated Rs 39.2 crore for training and development, with total employee benefits expenses reaching Rs 5,030 crore. The median employee salary rose by 7 percent in FY24.
Rising layoffs globally may be attributed to increasing economic uncertainty and the integration of artificial intelligence in the workforce.
Shantanu Deshpande, CEO of Bombay Shaving Company, highlighted that individuals in their 40s face the highest risk of layoffs due to their typically higher salaries.
He pointed out that the vulnerability of this age group has become a significant issue in the corporate landscape, as expressed in a recent Instagram post.
“When mass layoffs are imminent, those in their 40s are the most at risk because they’re the highest paid,” Deshpande remarked.
