Gearing Digitel for the Next Leap

*This case has been designed for iCreate 2016 and is for illustrative purposes only.

Pooja Pathak had joined as Director HR for Digitel few weeks back and was still settling in and learning the
ropes. From her interactions with the HR team and senior line leaders, the sense she got was of a company
that had achieved a lot; yet one that was hungry for lot more and looking to get there quickly.
This was further validated by her meeting with the CEO on his expectations from HR. Siddharth Singh
shared Digitel has grown significantly in my 2 years as CEO, however we need to achieve a lot more in
this year. Weve taken a target to increase Revenue market share by 1%, which is more than what weve
achieved in the last two years combined. With the new spectrum that weve acquired, we will also have
an aggressive deployment of 50,000 base stations, which is more than our total deployment over the last
five years. This will require acquiring new skill sets as well as managing internal capabilities well. All of this
we need to do while maintaining our current margin levels, which will require significant push on
digitization as well as ensuring our HR cost (including increments) increases by only 4%. Also with the
likely entry of an aggressive new player; even before we see competition in the market, we will see
pressure on talent & retention, especially in our senior & middle levels; as well as core functions.
Moreover he suggested that Pooja meet the respective Digitel Functional Directors and Business Heads
to take their views on the differing needs and challenges.
Excerpts of inputs from the respective Directors is as below:

Chief Marketing Officer, Shyam Kapoor

For this year of growth through new products & services, there are several imperatives from a talent
perspective. Retaining key talent despite the targeted head hunting of Digitel talent by new eCommerce
companies, who are also offering ESOP. Also attracting the best of marketing talent from other FMCG &
key marketing organization will be a key enabler for our ambitious agenda. We cannot afford to lose our
people to online marketing, brand and product marketing teams. What can we do to retain them and not
lose to our competitors? Can we increase the salaries of all our key team members in one go and ensure
competition cant touch them?

Chief Technology Officer, Yogeish Kumar

The demands on the Technology organization this year, are to deliver a massive deployment of high-speed
network across most circles as well as improve the Network experience of customers . The deployment
will require talent in new technologies & skills (from large Network technical infrastructure vendors) as
well as improving efficiency of our organization structure to deliver a deployment unparalleled in the
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history of Digitel. Our technical training program is highly coveted in the industry. Employees with as low
as 12 to 18 months experience are targets for headhunters. I cant afford to lose my employees both
top and average performers. I need them all to be able to deliver our strategic goal for the year.
To be able to quickly gear up for the technical competence needs, can I incentivize my existing employees
to acquire critical skills and complete technical certifications? A lot of them are already preparing for them
at a personal level. Once they complete these, they will be easily poachable by our competitors. So how
do I ensure they continue with us?
Our digitization arm is a full-fledged IT company in its own right, catering to both customer facing and
Digitels internal applications. Attracting talent from other IT companies is challenging for a Telecom
Brand. They aspire to work for big digital brands or IT giants. I cant compromise on quality of talent if I
want to take Digitel to the heights we aspire for. I am looking at hiring employees who are bright, young,
and passionate, with the best pedigree and experience. I am ok to pay a premium to get them onboard
and I am aware that some of these employees with even 2 to 3 years experience are paid much more
than our senior and experienced folks. Also we need to ensure that this team is engaged via clear career
paths, fun and engaging work culture as well as competitive remuneration & benefits.

Head Sales, S Ganesh

The new market strategy of granular market view along with newer products and increasing
competition which requires significant capability building of the Sales teams. Balancing the need of
ensuring productivity and efficiency with sufficient pipeline for Front-line employees is a critical need for
the function. Also I am not sure if our traditional Sales Incentive Plan is working anymore.

Head Emerging Businesses, Kapil Jethani

Digitel is venturing into several new businesses which is key in this digital age. We have already launched
2 megahit content-based apps. It has over 10 mn hits in a month, and we have tie-ups with all content
providers.
We have also won the payments bank license, and our next focus area is to develop our Banking solution.
Due to some initial issues, we do not have the first-mover advantage in the market. To make up for this
loss, I need to grow my Banks team and hire talent with critical skills from the banking, FMCG industries,
app, UI/ UX developers, etc. This talent is Gen Y, and asks for innovative rewards solutions. They need
benefits like work-from-home, childcare, etc. and do not follow the typical 9-to-6 model. They also dont
see much value in our annual bonus plan. They prefer a higher in hand salary with best in class benefits.
Pooja, I need you to quickly build some innovative rewards offerings to cater to my emerging businesses.
If we are not able to attract and hire talent in next 3 months, we will not be able to achieve our business
targets!

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Industry Overview:
Digitel had operated in the Indian Telecom sector for the past two decades and is one of the leading
players in the Indian market. India is the second-largest telecommunication market and has the third
highest number of internet users in the world. The mobile subscriber base (GSM and CDMA combined)
has grown from under 2 m at the end of FY00 to touch almost 996.5 m at the end of March 2015. Tariff
reduction and decline in handset costs has helped the segment to gain in scale. The cellular segment is
playing an important role in the industry by making itself available in the rural areas where the tele density
is far lower (48.37%) than that in urban India (148.61%).
The operators competitive positions improved during FY15, due to reducing competition, tariffs remained
stable; however, realizations fell due to the aggressive push for subscriber additions. While operators
succeeded in achieving good growth in subscriber additions, they will be tested with the imminent entry
in the sector of one of the leading Indian industrial houses.
In March, 2015, the Department of Telecommunications (DoT) concluded the auction process for 800
MHz, 900 MHz, 1,800 MHz, and 2,100 MHz spectrum. Of the 470.75 MHz that was put up for auction in
22 circles, 418.05 MHz was sold for a consideration of INR 1,098,749 million.
Balance sheets of operators have come under additional pressure due to the debt taken for the spectrum
auctions. Additionally, capex requirements have increased significantly in recent times as operators have
been improving capacity and efficiency of their networks to accommodate the exponential growth in data
consumption and to improve network quality.
(Refer Annexure A: Telecom Sector Key indicators & trends)

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Company Performance overview:

Digitel tracks its performance on a three-line graph; Total Revenues i.e. absolute turnover/sales, OPEX
Productivity this is computed by dividing operating expenses by the total revenues for the respective
period and Capex Productivity this is computed by dividing revenue for the quarter by gross cumulative
capex (gross fixed assets and capital work in progress). Measures for the trailing five quarters are as below:

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The HR Agenda
After listening to everyone, Pooja feels she has work cut-out for her; to define & drive an HR strategy to
enable this ambitious business agenda:
A) Go to Market excellence through granular view of markets & customers, especially High value
customers
B) Exceptional Network experience including complete deployment of High speed network on the new
spectrum acquired
C) Establish and grow emerging business to cater to new age needs of customers
D) Improve Customer experience through digitization initiatives
E) Continue to enable business by winning the War on Talent, creating a high performance culture &
enabling cross functional team work.
Key thoughts around which Pooja was contemplating as she was looking to chart out the way forward for
HR in Digitel;
A. How to address the disparate needs of the multiple businesses within Digitel with respect to
attracting as well as retaining critical talent
B. Need to be cost conscious, and ensure high productivity and efficiency in operations
C. Ensure Digitel rewards its employees
a. For high performance
b. For innovation and excellence
D. Ensuring stickiness of Key talent and critical skills as per needs of the business
E. Chalk out innovative rewards and benefits for the needs of Gen Y employees, particularly in the
emerging businesses;
Refer Annexure B: HR metrics & trends

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Questions:

What should be Digitels HR strategy to address the changing needs of the Business?
What Key best practices Digitel could adopt towards creating Employee stickiness as well as
enabling high Performance differentiation?
What should be the Employee Value Proposition that Digitel should offer to attract the right talent
especially in areas like Technology, Emerging Businesses and Marketing?
Should Digitels approach to Rewards & Benefits be segmented for different businesses vs a unified
approach? If so, how to maintain parallel rewards philosophies within the same organization?
What should be the rewards plan for Digitel and its emerging businesses?
How relevant are the traditional variable plans like Annual Bonus, Sales Incentives etc today?
Recommend a revised approach to variable pay and pay mix at Digitel by benchmarking with the
new age industry players that enables business success. Design a compensation structure ideal
to the varying needs of Digitel.
What are some of the innovative benefits plan Digitel can look at to change the game, while
being cost conscious?

The data and annexures are for your reference. Any research or information on the telecom
industry available online can be used for the purpose of this case.

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Annexure A: Telecom Sector Key indicators & trends

(Data As on 31st March, 2015)
Telecom Subscribers (Wireless +Wireline)
Total Subscribers

996.49 Million

% change over the previous quarter

2.63%
Wireless Subscribers

Total Subscribers

969.89 Million

% change over the previous quarter

2.75%

Urban Subscribers

555.71 Million

Rural Subscribers

414.18 Million

Market share of Private Operators

91.68%

Market share of PSU Operators

8.32%

Tele density

77.27

Urban Tele density

143.08

Rural Tele density

47.78
Telecom Financial Data (QE Mar-15)

Gross Revenue(GR) during the quarter

% change in GR over the previous quarter
Adjusted Gross Revenue (AGR) during the quarter
% change in AGR over the previous quarter

INR 65227 Crore

1.99%
INR 45158 Crore
3.60%

Revenue & Usage Parameters (QE Mar-15)

Monthly ARPU GSM Full Mobility Service

INR 120

Monthly ARPU CDMA Full Mobility Service

INR 108

Data Usage of Mobile Users (for the QE Mar-15)

Data Usage per subscriber per month - GSM
Data Usage per subscriber per month - CDMA
Data Usage per subscriber per month Total(GSM+CDMA)

89.06 MB
278.22 MB
99.46 MB

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Annexure B: HR Metrics & trends

Telecom Sector voluntary attrition %
Overall Attrition
Top Executive
Middle Management
Junior Manager/Supervisor/Professional
General Staff
Overall

2011-12
4.2
9.3
16.3
8.8
17.9

2012-13
9.5
10.4
13.1
16.0
15.7

2013-14
4.7
8.3
13.4
14.8
19.2

2014-15
14.3
11.5
13.6
9.1
17.7

Digitel voluntary attrition %

Overall Digitel
Marketing
Digitization
Network & Technology
Sales
Customer Experience
Emerging Business

2014-15
16.5
22.5
19.0
18.0
19.0
12.0
25.00

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Talent Outflow to (By Function):

Network & Technology:

MFG
5%

OthersNot Disclosed
3%
4%

DTH
3%

IT
11%
Studies/
Sabattical/ Own
business
17%

Telecom
57%

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Sales:
eCommerce Not Disclosed DTH
3%
4%
5%
FMCG
6%

BFSI
3%

Telecom
43%

MFG
6%
IT
8%

Others
13%
Studies/
Sabattical/ Own
business
9%
Marketing:

Not Disclosed
4%

BFSI MFG DTH

4% 2% 2%

Studies/
Sabattical/ Own
business
10%

FMCG IT
1% 1%

Telecom
41%
Others
11%
eCommerce
24%

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Talent inflow from (By Function):

Network:

MFG
3%

DTH Others
2% 5%

IT
8%

Telecom
82%

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Sales

Fresher
17%

Cons
4%

Others
9%

MFG
6%

BFSI
4%

DTH
6%

Not Available
10%

IT
14%

Telecom
30%

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Marketing:

Cons
3%
IT
13%

DTH
2%
MFG
8%

Not Available
7%

Others
17%

Telecom
50%

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Customer Experience

MFG Cons
5% 2%
BFSI
10%

Fresher
5%
Not Available
27%

IT
17%

Others
7%
Telecom
27%

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