Tuesday, May 11, 2010

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Experts' take on how India Inc handled layoffs

You have to look at the layoffs within the context of the fear of a global financial crisis and an impending deep recession. After our annual performance appraisal last year, we let go of about 3% of people as compared to 1.5-2 %. In a good year, when people rank poorly, they tend to leave on their own. However, that wasn't the case last year as there weren't many jobs available. It was a gut-wrenching decision, but it had to be taken. We kept people on the bench for a longer time, and doubled our investment in training and education during the period. This year we are looking at hiring about 30,000 people.

Manish Sabharwal, CHAIRMAN, TEAMLEASE:
There is a new normal in the industry as companies are realising that they can do far more with less people. When the tide was high, hiring standards had gone low and companies had started converting variable costs into fixed costs. This resulted in low productivity which came back to bite them when things got bad. Companies are still not back to hiring the way they did in the past. Over the last few months when companies say that they have been hiring, it means that they are no longer firing people. The upside to all of this however is that companies are now focussed more on quality and the productivity of the employee.

Companies often use the 'saving jobs' rationale to justify retrenchment. They say they are letting go of 500 people as a way of saving the remaining 3000 people. However, the way they have gone about doing this has left a lot to be desired. Many companies hired in the previous year based on predictions of growth, but it was a forward hedge that went wrong. Companies that fired people in a huff now find themselves in a situation where they have to go out and hire people at a far higher remuneration , and are still finding it difficult to attract the right kind of talent.

When you are trying to save an organisation, there is a very fine line be tween whether you need to do something or not. When it comes to letting go of people, there are only certain situations, when the company is faced with bankruptcy or is restructuring to avoid going under, that layoffs deemed acceptable. There is a relatively simple quid pro quo between reducing the number of people and saving costs, but has deeper implications. As you slice layers from the organisation, you lose not only the individual, but also his collective years of experience within the organisation. The employer brand also needs to be safeguarded. Layoffs, done as a first resort without compassion, have a negative impact on employee engagement among the people who are still at the firm, often leading to the best talent leaving the organisation.
Source: EconomicTimes

IT cos hire non-techies to cut costs

When Ishwar Prasad graduated from a Mysore college two years ago with specialisation in commerce, a career with one of India’s top three technology firms was nowhere on the agenda.

However, Prasad went on to do a six-month diploma in computer hardware management last year and is now helping some of the leading telecom companies in the world manage their computer desktops and other infrastructure, from a remote infrastructure management centre at the tech firm.

As tech firms automate their commoditised service offerings, they do not necessarily need engineers to perform all tasks. Instead, they are increasingly hiring non-engineering graduates such as Prasad for testing software applications and managing computer infrastructure of their clients in order to do more with fewer staff and at lower wages than computer engineers.

From nearly 10% of their current workforce, non-engineering graduates could account for nearly 20-25% of the staff at companies such as TCS, Wipro and HCL, over the next one to two years. Multinational rival Cognizant already has almost 20% of its global workforce who are non-engineering graduates.

Prasad is among thousands of non-engineering graduates being hired by companies such as Tata Consultancy Services (TCS), Wipro, HCL and Infosys for performing highly automated tasks of software testing and computer infrastructure management with the help of user-friendly, readymade platforms that can serve multiple customers.

“In my hometown, working for Infosys or Wipro makes parents proud. I could have never got into such companies with a commerce degree, but now many of my relatives think I have made it big and become a software engineer,” says the 27-year-old.

Companies such as Wipro are already readying their strategies for shifting nearly 40% of software services to readymade templates that can serve additional customers without having to hire incremental staff.

“The prime impact of these delivery models is the asset-based view as opposed to a labour-based one, that is, less number of people for the same work and an increase in operating margins per employee, while simultaneously reducing capital expenditure for their clients. The impact on employee mix (those with a BE degree vis-a-vis non-BEs) will be there but will not be applicable for all technologies and domain areas,” said Saurabh Govil, senior vice president HR, Wipro Technologies.

For years, India’s $50-billion software exports industry has been hiring thousands of engineering graduates every year for writing software codes and processing back office tasks for top customers such as General Electric, Citibank and JP Morgan Chase. However, increasing wage inflation and rising attrition has forced them to seek ways to arrest linear growth.

Intelenet to hire 7,000 in India

Leading BPO services provider Intelenet Global Services has said it plans to expand its footprint overseas and hire around 7,000 personnel in FY '11.

"The IT sector is expected to grow at 15-20 per cent and so is the BPO sector. With the US economy back on the recovery path, we expect double-digit growth as against four-seven per cent last fiscal. We are, hence, planning to expand our business and hire more people. We plan to hire 7,000 personnel across the country this year," Intelenet CEO Susir Kumar said.

Currently, Intelenet employs over 32,000 people across the globe at 35 delivery centers at strategic locations. It has a headcount of 18,000 in India.

Mumbai-based Intelenet, that operates its BPO arm under BSE-listed Sparsh BPO, also plans to open more offices overseas and is focussing on markets such as China, the Middle-East and South America.

"The emerging markets such as the Middle-East, China and Latin America have tremendous potential. We are planning to open a few offices there. Besides, we are also looking at expanding our domestic operations to Tier II and III towns," Kumar said.

He, however, refused to divulge details on how many offices it plans to open and the amount of investment to be made in fiscal 2010-11.

Intelenet, with a global turnover of $350 million, already has offices in the US, Poland, the Philippines, Mauritius, the UK and Australia, to cater to the needs of several Fortune 500 companies there.

The company, which provides BPO solutions on banking and financial services, travel, hospitality and telecom, has recently added manufacturing services to its portfolio. It has over 90 clients across these sectors.

Desi IT co bags $4.5 mn UAE contract

Software developer Valuemart Info Technologies bagged a $4.5-million (Rs 20 crore) contract from the UAE-based Supreme Software Technologies to develop a project help desk solution, the Bangalore IT firm said.

"The project help desk suite is an enterprise web-based solution for electronic monitoring of project-related processes. The solution helps an enterprise to track workflows of multiple projects and ensure their completion within timelines," Valuemart managing director C K Vasudevan said.

The company will execute the order within two years to facilitate Supreme Software manage multi-location project teams, including those working on offshore and onsite models.

"Supreme Software awarded the contract after we successfully demonstrated the functional aspects of the suite as a proof of concept. The deal will also enhance our ability to bid for high value projects and move up the value chain," Vasudevan said.

The 13-year-old Valuemart offers enterprise resource planning (ERP) and business process management solutions in diverse verticals such as manufacturing, banking, financial services, insurance and legal.

Cost cutting helps Sony cut losses

Sony Corp reported a smaller loss than the company forecast, citing bigger-than-expected cost reductions and gains from its life insurance unit.

The net loss was 41 billion yen ($445 million) in the year ended March 31, narrower than the 70 billion yen the company had previously projected, Tokyo-based Sony said in a statement today. Sales were 7.21 trillion yen, or 1.2 percent lower than forecast, according to the statement.

The maker of Bravia televisions and Cyber-shot cameras has eliminated 20,000 jobs and shut factories to weather the global recession, which led to Sony’s first back-to-back annual loss since its listing half a century ago. Chief Executive Officer Howard Stringer is counting on a recovery in global demand for electronics to revive earnings growth this year.

Sony shares gained 0.7 percent to close at 3,080 yen on the Tokyo Stock Exchange before the company reported preliminary results. The stock has gained 15 percent this year, outperforming the benchmark Nikkei 225 Stock Average.

Cognizant promotes 15,000 globally

It's raining benefits at Cognizant! First, the company paid out about 200% bonus in March to a cross section of its employees. Now, the company is promoting about 15,000 of its associates globally who are below the 'manager' level.

The company has sent out letters of promotion to 15,000 employees on Friday that will take effect from May 1, 2010, sources said.

ToI has also learnt that this is just the first round of promotions and a second batch of promotions for people above the 'manager' level will happen in May. It is learnt that a sizeable chunk of the employees in that level are also likely to see themselves redesignated to a higher level. These employees would receive a fair chunk of pay hikes as well, sources added.

The company has 78,400 employees. This is the single largest number of promotions announced by any IT company in India this year. Last month, Infosys had announced promotions for 7,500 employees.

"This morning we announced global promotions for associates below the level of Manager. These promotions would be effective May 1, 2010. Cognizant's industry-leading growth over the past year has enabled promotion and career growth opportunities to a record number of employees," said Gordon Coburn, chief financial and operating officer, Cognizant in an e-mail.

Apart from the email, company officials remained tightlipped about any of the announcements including a hike in the salaries.