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


  1. I too heard many people talking about similar experience with tech mahindra pune.
    It seems pune culture is intolerant and racist. As person with wide managment expereince in IT sector, i find the native marathis lacking tolerance and many senior IT professionals find the culture in pune IT companies unprofessional and disrespectful towards non marathis. As far my experience and experience of several other goes local pune IT guys think they belong to a superior race and outsider are spoiling their environment.
    They dont realize that pune's economy owes its prosperity to rest of India as the high value white good snd automobiles made in pune are sold everywhere in India.
    Every marathi IT professional looks to get into management roles by hook or crook(not that they have management skill and talent) so that he need not work and indulges in regionalism politics. Any outsider applying for managerial position is rejected and in case the person gets through and joins the company in pune the person is mobbed so that there is no alternative but to leave.

    Interestingly the HR departments of pune based It firms encourage this trend.

    they seem to be not bothered about what will happen if marathis outside maharashtra are given a reciprocal treatment similar to the one given to outsiders in maharashtra cities like pune.

    # recism Indian state maharshtra
    # Mobbing at work place in pune IT companies