Showing posts with label Cost cutting. Show all posts
Showing posts with label Cost cutting. Show all posts

Monday, June 17, 2013

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IBM lays off undisclosed number of workers

IBM has laid off an undisclosed number of workers this week as the company intensifies its focus on some of some of the technology industry's hottest markets.

The cutbacks are part of a reorganization that IBM Corp. executives disclosed in April during a conference call discussing the Armonk, New York, company's first-quarter earnings. IBM said it would spend $1 billion reshuffling the types of jobs it needs in its workforce this year, with most of the changes coming before the end of June. The company indicated most of the layoffs would occur outside the US. Read More at Huff post.

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.

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.

Monday, October 26, 2009

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No pay for Satyam's Virtual Pool benchers from Dec 18

Close on the heels of the news that Mahindra Satyam will hire some 130 people, comes the announcement that it will not pay salaries to employees in the virtual pool after December 18. The employees under this virtual pool program (VPP) will, however, have the option to stay on the company’s rolls without pay till March 2010.

On June 11, the company announced the creation of the virtual pool, placing nearly 8,000 associates on the bench. "The surplus employees will be put in the VPP and paid basic salary, PF and medical insurance," Vineet Nayyar, CEO, Tech Mahindra, had said even as he ruled out any retrenchment.

In a recent email to the associates, the Satyam management stated, “We continue to recall, based on need and project requirements. However, it does appear that we may have constraints to reinstate all of those who are on VPP. Under the circumstances, we have informed our associates on VPP that we are constrained by this reality and have extended the option for them to continue on our rolls, albeit without any pay (should they choose to do so) for a further period of three months — that is, from December 18, 2009 to March 18, 2010.”

According to the news report, the VPP staff, during this period, will continue to have access to VPP services, including virtual learning and outplacement services. The official mail also said that the 'loss of pay' status would also be considered for the employees' service period.

A Mahindra Satyam spokesperson claimed that the company had absorbed about 1,500 associates from the virtual pool. The spokesperson also denied that the company was "laying off" people, even as the mail speaks of "separation of employment".

Incidentally, in the mail dated October 19, the company said, "In our earlier communication dated June 11, 2009, you were placed on VPP for a period of six months and accordingly, your Virtual Pool Leave is due to end on December 18, 2009. It is rather unfortunate that due to the continued economic constraints and business outlook, we do not anticipate that we will have the ability to recall many of our valued associates within the VPP period."

The company has a total of 34,000 associates globally.

Wednesday, October 14, 2009


Companies may switch to 'flexible' wage model to control costs

In their bid to maintain a tight lid on wage costs, pruned during the downturn, companies could move toward offering flexible employee benefits while restoring the compensation structure that had been changed as part of salary freezes.

While salary increments are beginning to be implemented as things look up, the sharp growth in benefit costs, mainly in double digits, could see more flexible benefit schemes where the costs are shared between the employer and employee, says consulting firm Watson Wyatt.

Watson Wyatt, which recently conducted an employee benefits trends survey across 12 countries in the Asia-Pacific region, including India, found that there is an increasing trend to provide flexible benefit programmes for employees where they can choose the benefits they value the most.

But the survey also threw up an interesting fact: China and India stand out as countries with the highest percentage of having corporate benefits strategy - 84% and 79%, respectively. The costs in providing benefits, however, are rising.

“It is very much the case that employers are facing double digit increases in healthcare costs and premiums in India,” said Kulin Patel, head of benefits practice in India, Watson Wyatt. “Among companies we have interacted with and collated data, we frequently hear of premium increases of 10% to 20%,” he said.

Watson Wyatt is one of the world’s leading business partner to most organisations on people and financial issues and has provided solutions to many Indian companies.

As the cost of group health insurance has jumped 15-20% in the past 12 months, cost-conscious managements are now asking employees to share rising health insurance bills, which were earlier footed entirely by companies, as part of employee benefits. While traditional benefits still dominate, flexible benefits scheme are gaining favour, said industry executives. According to Essar Group president (HR) Adil Malia, all compensation structures are market-focussed and dependant on the industry. “A structure for the oil and gas sector would be different than from that for a BPO business,” he said, adding that the performance-linked incentives and benefits would be linked to the performance of that company and the market. “We devise salaries such that 15-20% constitutes the variable component,” he said.

The Essar Group has diverse interests including steel, oil, power, shipping and BPO, but wages add up to only 2% of its total costs.

It is also seen that companies design benefits programmes to attract and retain people. Private medical insurance and additional annual leave and pension schemes are some of the most popular schemes. Retirement schemes, medical screening, life insurance, and company car feature are some of the benefits that companies could likely provide. While benefits like gratuity and provident fund are based on the basic salary element, overall value of benefits may be expressed as a percentage of the total cost-to-company.

The Watson survey said that as a percentage of payroll, 39% of the companies in India spend less than 10% of their payroll on benefits, while 35% spend over 20% of the payroll.

This means that there is a wide range of the benefit spend, compared to payroll, said Mr Patel. “It also means that there are more companies in India that provide less than 10% of payroll than in Asia Pacific. Despite this data, it was marked that employers felt that value of benefits were not undervalued as much as in other parts of Asia,” he added.

Tuesday, September 29, 2009

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IT firms pull out all stops on staff training

Indian IT majors may have tightened their belts in various areas to contain costs as a fallout of the global economic slowdown. However, most of them see continuing value when it comes to employee training, even though it skims crores of rupees off their top-lines.

Top tier IT firms — including Tata Consultancy Services (TCS), Infosys Technologies, Wipro and HCL Technologies — have identified the need to train the brains they handpick annually from India’s top engineering colleges and technical institutes as a critical task, even as the industry is seeing a degree of upturn in client demand.

India’s largest IT services provider, TCS, for instance, spends 2 per cent of its revenue every year on training new entrants. Bangalore-headquartered Infosys recently announced the opening of a grand training facility at its Mysore campus. Infosys annually spends over Rs 800 crore on training alone. Wipro spends about 2 per cent of its net sales in providing training to employees.

While Infosys and TCS have, to a certain extent, tried to centralise their training resources, Wipro’s strategy has been of a federal nature to cater to local manpower requirements. Wipro has set up an archipelago of training centres in proximity to its competency centres all over India and overseas.

“Wipro believes in taking learning as close as possible to the learner. Hence, for fresh recruits, training is conducted at the development centres where the employee is to be placed. Training happens primarily at our Talent Transformation Centres in Bangalore, Hyderabad, Pune, Chennai, Kolkata and Kochi,” says Sreekala Ramamurthy, GM (talent transformation), Wipro Technologies. Overseas recruits, she says, are either provided training at the company’s global centres like the Atlanta Development Centre or “...recruits are flown down to our India offices”.

HCL, too, has decentralised its training infrastructure across the globe because its employees are no longer confined to a particular geography or location. According to Anand Pillai, senior V-P and global head (quality, talent transformation & intrapreneurship development), HCL Technologies: “Since learners are spread across the globe, the entire training department is also spread across the world. Our programmes are standardised to cater to global learning challenges and simultaneously manage different cultural nuances and local sensitivities.”

TCS provides an Initial Learning Programme (ILP) at the company’s corporate learning centre in Thiruvananthapuram. “We invest heavily in world-class training for our employees. ILP training is primarily conducted at our corporate learning centre at Thiruvananthapuram for Indian and non-Indian trainees. We replicate our fresher training programme at Guwahati, Bhubaneswar, Coimbatore and Baroda, as well as overseas, to bring scalability to our training model,” says Ajoy Mukherjee, V-P & head (global HR), TCS.

TCS’ new facility, the Peepul Park, is spread over 12 acres of newly acquired land in Technopark. The 3.5-lakh square feet Peepul Park is snazzily designed and also houses a Leadership Development Institute. The ILP Learning Block can accommodate 1,000 employees at a time, a hostel block accommodates 500 people, with a recreation centre and library thrown in. The facility has a capacity of 1,500 people.

The ILP is replicated in overseas geographies for new hires from countries like Australia, China, India, Hungary, Uruguay, the UK and the US. TCS also ensures that it hires people with diverse educational backgrounds and across geographies.

Infosys recently expanded the company’s global training centre, located at its 337-acre Mysore campus, by setting up another dedicated facility (GEC-II) for training. However, Infosys also maintains training infrastructure at all its development centres. The company recently extended the training duration for new recruits (freshers).

“We consider training as an investment in the future. Our investments to enhance our training capabilities are in keeping with future requirements,” justifies S Gopalakrishnan, CEO and MD, Infosys Technologies.

Tuesday, September 22, 2009


MindTree to slash trainees' salary, campus hiring

MindTree, an international information technology (IT) company is planning to take similar steps like TCS and other IT giants by slashing the salary of trainees and campus hiring to stabilize the company's performance.

On the current trends, S Janakiraman, President, Group CEO - Product Engineering Services, MindTree said, "Revising salary is the need of the hour. This will bring a change in mindset of employees, and variable pay should not be linked only to the company's revenue, but also on productivity of the employee. We have already revised the variables in the R&D division, and this segment has shown great recovery in the last few months."

The company, which offered jobs to 750-780 students in 2008-09 fiscal, is planning to decrease the number in the next year. Janakiraman said, "To maintain our strong relationship with some prominent colleges, we will keep hiring from the campus, but seeing the affect of slowdown, we are planning to hire lesser number of engineers next year."

As the economy has started recovering, all the companies have started looking beyond the boundary. On the similar note, MindTree is planning to open a bridge office in China by the end of 3rd quarter (December 2009) of the current fiscal. Janakiraman said, "We are in the process of registering the subsidiary shortly. The engineers to China centre will be outsourced from India as there is a language barrier for local hiring. The subsidiary will act as a bridge for Chinese customers and global giants who have presence in China." Currently, the company has only one customer 'Widget' in China.

In the quarter ended June 30, 2009, the company's total revenues were at $62.1 million, indicating an increase of 36.3 percent Year over Year (YoY). The profit after tax (PAT) was $11.56 million with an increase of 554.6 percent YoY. However, Quarter over Quarter (QoQ), revenues declined by 9.8 percent in rupee terms.

Thursday, September 17, 2009

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Companies continue to send employees overseas amid cost cuts: KPMG

Companies across the world have continued to send employees overseas to take advantage of business opportunities, despite a reduced budget for international assignment programs during the economic downturn, a KPMG survey says.

According to a survey of 470 human resources (HR) executives by the global consultancy, firms are implementing a variety of options to potentially save costs associated with long-term or standard assignments.

Some of these options include short-term assignments (STAs), currently being used by 79 per cent of firms, while permanent transfers is being utilised by 45 per cent of organisations, the survey said.

"KPMG survey results mirror our experience with clients. We saw that companies/employers often adjusted parts of their programs and examined alternate assignment types based on their business needs, but continued to send assignees to work on long-term business opportunities overseas," KPMG LLP managing director of Global Mobility Advisory Services Achim Mossmann said.

"As the decline in global economy affected almost every area of business and most firms assessed cost-effectiveness of their operations, international assignments were no exception," Mossmann added.

The KPMG survey also revealed that firms made changes to various policy provisions to save costs.

For example, to help determine the cost of living adjustment (COLA) calculation on their assignee packages, 31 per cent of the firms surveyed are using an "efficient purchaser index".

The index is a sliding scale measurement of the ratio of the cost-of-living between the home and host locations, which assumes that an experienced assignee is a 'smart shopper' and is able to purchase goods and services more economically than the average assignee.

The KPMG survey revealed that 49 per cent of respondents find assignees take too much time to administer. Perhaps in response to this view, almost half (47 per cent) of the respondents outsource parts of their international assignment programs to gain access to a service provider's global resources and expertise.

"In some cases, HR departments have been downsized leaving fewer people to manage more work. In these situations, administrative models are often reviewed to achieve efficiency and cost savings," Mossmann said.

The KPMG report stated that outsourcing certain program elements can help reduce the time and effort spent by HR professionals and allows the organisation to tap into the economies of scale in an outsourcing environment.

"As organisations continue to utilise international assignments, they also need to make sure there is a mechanism in place to measure how these assignments provide long-term benefits to the organisation," it added.

Wednesday, September 16, 2009

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No variable pay for TCS trainees for first six months

India’s top software exporter Tata Consultancy Services (TCS) has said that fresh recruits will not be eligible for variable pay during the first six months when they are on training. The decision will take effect from this quarter when about 1,500 freshers are scheduled to join the company.

“The compensation re-structuring is primarily from a productivity point of view — we want them (freshers) to understand variable component is really a ‘variable’ and will depend on how well they perform in their project. We want that accountability and mindset change to happen from day one,” said Ajoy Mukherjee, head, global HR. During the training period, freshers are not billable as they don’t work on any client projects, and hence do not contribute to company profits.

Freshers at TCS get variable pay of Rs 5,000 a month. The move will result in savings of close to Rs 75 crore for the company, as it has recruited about 25,000 students from campuses in 2008. These freshers are expected to join the company during the course of fiscal but depending on business demand and training capacity.

“There will be savings as a result of this — not very significant but not very low either. The primary reason is not savings, but a mindset change,” said Mr Mukherjee. He said TCS would honour all the campus offers that were made with 1,500 freshers joining this quarter and the rest by the end of the fiscal.

The concept of variable pay was introduced for freshers last year, and the training period, which was for three months, was extended by another three months in the fourth quarter of last fiscal. The company had also decided not give any increments this year, and Mr Mukherjee said there were no changes to this as of now. Last year, it had given a 10% annual increment to all employees. However, those employees, who have been promoted, have been given nominal increments this year, he said.

Companies are not yet returning to big spending and TCS is still in a mode of being as efficient as possible, he added.

The company is also recruiting 250 freshers from US universities for its Cincinnati campus in the current fiscal. However, these freshers have a different compensation structure and will not be affected by the change in variable pay policy. TCS is attempting to replicate the same model it has in India on its Cincinnati campus as well. It will hire students from technical fields on campus and train them.

Friday, September 11, 2009

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Billing rate cuts may not lower delivery costs: Forrester

In a blow to mid- and small-size IT services vendors, technology research firm Forrester has said while these providers may offer lower billing rates than large offshore providers such as Tata Consultancy Services or Infosys Technologies, it does not necessarily translate into lower costs for the customer.

“The lowest hourly billing rates don’t always result in the lowest cost of delivery,” Forrester has said in its latest report.

Lower costs and greater flexibility are the most important reasons for many organisations to choose smaller providers over the tier-I providers, and Forrester’s report may have significant ramifications on future buying patterns. “But this does not mean tier-II providers should be avoided completely,” Sudin Apte, senior analyst, Forrester, and the report’s lead author, told ET.

Of the 300 or so tier-II firms, 10-15% provide value addition through specialisation around a line of service or technology, specialisation around an industry and business process, or a unique client experience, he said. The report mentions providers such as AppLabs (testing services), Microland (infrastructure services) and others such as Syntel and Kale Consultants among the mid-sized specialists. Sourcing teams in companies need to evaluate mid-sized specialists, depending on the needs and objectives of the relationship in terms of the value and duration, according to the report.

Apart from lower billing rates, the other reason for companies to opt for tier-II vendors is because they are flexible and easy to work with. Quoting the example of an European insurance firm that was adding two tier vendors, the report said this firm found its tier-I supplier not agile enough and demanding compensation for variation.

However, Forrester said the line-dividing flexibility and chaotic strategy was very fine. “Small providers often end up accepting work outside their comfort zone to defend the current revenue in an account. Then they start building capability, resources, and often effectively pilot the first project at client cost,” said Mr Apte.

The most common grouse against tier-I players was that they were becoming more like Accenture and IBM, and were no longer interested in small deals. They were pushy about volume ramp-up and no longer had the personal touch. Mr Apte said, tier-I players need to articulate their investments in building IP (intellectual property), innovation and manpower better to clients. “Clients are still looking at them as Indian companies with customer centricity, as being easy to deal with and as being transparent,” he said.

Wednesday, September 9, 2009


Wipro may shut its centre in France

The global IT arm of Wipro Ltd, Wipro Technologies, is reportedly planning to shut down its development centre in Sophia Antipolis, France.

The company is said to have started consultation process with local employees in this connection. According to EETimes, in an open letter the employees of Wipro-NewLogic, based at its Sophia Antipolis center in France, have said that the company has closed the center and laid off its staff.

Wipro-New Logic development centre builds components and connectivity-based semiconductor intellectual property (IPs) in wireless and wire line segments that are used by customers in System on Chip (SoC) and ASIC designs.

According to the news report, the staff at the French center, numbering 61, had earlier written to the press saying that "We are the employees of Wipro-NewLogic's Research and Development center in Sophia Antipolis (France)... On the June 22, the executive management of Wipro-NewLogic announced to the employees that Wipro would stop all of its semiconductor activities in France and close the facility: 61 engineers will be terminated."

Commenting in the issue, Christophe Martinoli, head of France, Wipro Technologies, reportedly said in a statement that given the market conditions and the economic problems facing this business, we have had to review our semiconductor IP portfolio, a niche offering within our overall semiconductor business. After carefully considering all possible options, we have initiated a consultation procedure with the employee representatives in France in relation to the same.

The company, however, maintains that the likely closure will not affect its presence in France, which it plans to grow.

Incidentally, this is not the first time that Wipro is pulling out of the semiconductor IP business. Earlier, the company had shut down its wholly-owned semiconductor IP company started in the US in the late 1990s.

Wednesday, September 2, 2009

Shoppers Stop’s top 150 take 15% pay cut

The K Raheja Corp-controlled department store chain Shoppers Stop has cut its management ranks as is restructures operations to cut costs and swing back to profitability.

Not only have the top 150 employees of the company taken a pay cut of 15 per cent, but BS Nagesh, the vice-chairman, has cut the top management ranks to make the organisation leaner to cope with decline in same store sales.

“We have operated a two-dip structure with a back-up available for the top management up to four levels as part of our exercise of identifying and groom talent. We also had a corporate layer of heads above the respective vertical’s CEOs whose focus was to drive synergies across our formats even as we were driving top line growth. We have now dismantled this dual structure corporate layer,” said Nagesh.

Angel Broking, in a recent research report, said the company cut staff costs by not replacing 300 floor-level staff, who had left the company earlier. As a result, in the quarter ended June its consolidated employee costs fell by 24 per cent to Rs 18.43 crore. The company also cut costs by shrinking its office space by 20 per cent and cutting its corporate office expenses by 40 per cent, Viraj Nadkarni of Angel wrote in his research report.

“We have eliminated the position of business head in charge of property acquisition as we found that most developers wanted to deal directly with the managing director or the Rahejas when it came to agreeing deals,” said Nagesh. As a result now, Vivek Mathur, who is head of e-commerce, is also in charge of the corporate planning function while C B Navalkar, the gro-up chief financial officer, also doubles up as the chief executive office of Crossword Bookstores.

The restructuring initiatives have nevertheless allowed the company to register a Rs 7.63 crore profit before interest and tax in the quarter ended June 2009 as compared to a loss of Rs 20.25 crore in the year ago period.
Shoppers Stop is also on the lookout for another CEO for Hypercity Retail after its expatriate South African head Andrew Levermore left after finishing two contract terms in India.

Tuesday, August 25, 2009


10 days off for Honeywell employees without pay

Honeywell has announced that its employees will have to take a mandatory 10 days off in the month of December-January without pay. Krishna Mikkilineni, President of Honeywell Technology Solutions, conveyed the decision at a public gathering in Bangalore recently, reports Economic Times.

On this matter, a Honeywell Spokesperson said, "Even as Honeywell continues to grow its businesses in India, our employees have agreed to participate in a voluntary and temporary reduced work schedule, in consonance with their colleagues elsewhere."

Honeywell, which makes products like aviation electronics, car turbochargers and temperature control systems for buildings, has been hit badly by the global recession in all of the key businesses it supports - aviation, auto and property. In the second quarter ended June 30, its profit plunged 38 percent and revenue dropped 22 percent.

In the quarterly report, the company said that it did not expect any recovery this year from the recession, as customers were expected to keep holding off on the purchase of Honeywell parts. Sales in the aerospace unit, which makes radar systems and other aviation equipment, dropped 17 percent, to $2.7 billion. The company said that many of its airline customers were choosing to use parts from their own idled planes for repairs rather than buying new parts from the company. One of the few growth areas is military sales, where Honeywell expects a three percent growth in sales. David M. Cote, Chief Executive, Honeywell said, "We are executing very well. Unfortunately, it is a very tough economic environment."

The company has taken a number of cost cutting measures. At least for some employees in the U.S., Friday is now a half-day without pay. In India, where it has 10,000 employees, benefits like cafeteria subsidies and vacation rewards at the end of five years of service with the company have been withdrawn.

Saturday, August 22, 2009


Oracle cuts CEO's base salary to $1

Software giant Oracle Corp said in a regulatory filing on Friday that it would cut the salary of its chief executive to $1 in fiscal 2010 from $1 million in the previous year.

Chief Executive Larry Ellison agreed to the pay cut, according to the filing. "The compensation committee recognizes that Mr. Ellison has a significant equity interest in Oracle, but believes he should still receive annual compensation because Mr. Ellison plays an active and vital role in our operations, strategy and growth. Nevertheless, during fiscal 2010, Mr. Ellison agreed to decrease his annual salary to $1," the company said in a filing.

A spokeswoman for the company declined additional comment. Oracle's executive compensation packages include a base salary, an annual cash bonus and stock options.

In fiscal 2009, 97 percent of Ellison's overall compensation was in the form of a bonus and stock options. Only 1.2 percent was his base salary and 1.8 percent was other benefits, according to the company.

All not well at Honeywell, Accenture

Green shoots? Honeywell and Accenture don’t appear to be seeing any. The former has announced that its employees will have to take a mandatory 10 days off in December-January without pay. And the latter has just issued a statement that it will lay off 7% of its senior executive workforce.

Honeywell employees in India said that Krishna Mikkilineni, president of Honeywell Technology Solutions, conveyed the decision at a public gathering in Bangalore recently. When contacted by TOI, a Honeywell spokesperson declined to go into specifics, but issued the following statement: “Even as Honeywell continues to grow its businesses in India, our employees have agreed to participate in a voluntary and temporary reduced work schedule, in consonance with their colleagues elsewhere.’’

In the case of Accenture, the company’s global CEO William Green said in a company release issued on Thursday: “We are acting boldly to position Accenture better for both short-term and long-term economic improvement growth and profitability.’’ The 7% workforce reduction would mean over 300 senior executives would be laid-off. The company globally has about 177,000 employees, of which 4,800 are senior-executive employees. The Accenture release said it will also reduce excess office space globally.

Till the time of releasing this story, Accenture had not replied to a mail from TOI asking about the extent to which its Indian operations would be affected by the move.

The technology sector in general is still some way from a recovery. Most companies around the world have tightened their tech budgets. Honeywell, which makes products like aviation electronics , car turbochargers and temperature control systems for buildings, has been hit badly by the global recession in all of the key businesses it supports—aviation , auto, and property. In the second quarter ended June 30, its profit plunged 38% and revenue dropped 22%.

The company has taken a number of cost cutting measures. At least for some employees in the US, Friday is now a half-day without pay. In India, where it has 10,000 employees, benefits like cafeteria subsidies and vacation rewards at the end of five years of service with the company have been withdrawn.

But there are indications that the downturn in technology , like that in many other sectors, is bottoming out. One evidence of that is the re-emergence of recruitment advertisements. In recent weeks, prominent companies like Infosys, GE Healthcare, Infotech and even Accenture itself has issued ads seeking to fill varied positions.

Thursday, August 20, 2009


Most employees in dark abt biz performance impact on pay

Companies in different parts of the world are keeping their employees better informed about business activities amid economic downturn, but on pay and benefits, the communication seems to be far less, says a survey.

According to global consultancy firm Watson Wyatt, many companies have either communicated to employees about their business performance or plan to do the same in the coming months.

However, the report noted that a considerable chunk of firms surveyed have not informed their employees much about the impact of business performance on pay and benefits.

"Though three-fourths of companies have communicated to employees about the organisation's business performance or plan to do so within 12 months, a considerable number of companies aren't making the connection between the business results and things that affect workers most personally: pay and benefits," the report noted.

The findings are the outcome of a survey covering a total of 328 employers from North America, Europe, the Middle East and Australia who took part in the study, from late-April through mid-June 2009.

In the coming months, only 28 per cent of companies plan to increase communication to employees on business performance. But, when it comes to benefits for employees, only 27 per cent intend to increase their communication while it is only 19 per cent in the case of pay.

"During the past year, employers across many industries have encountered significant challenges in dealing with the global economic downturn,

"... Messages to employees explaining these changes have not been easy to deliver. Employees are concerned and confused. They do not know what all this means for their future or when the next take-aways will come along," the report said.

In terms of the medium of communication with employees, 'face-to-face discussions', 'staff meetings' and 'e-mails' are preferred, the report added.

As per the survey, leaders at different levels of their organisations have different goals for communication efforts. Among those surveyed, about 49 per cent senior leaders are most apt to communicate to ease employee stress regarding the impact of economic downturn on business.
Source: EconomicTimes

Tuesday, August 18, 2009


IBM proposes cut in pension

After being in news for another round of layoffs recently, IBM's back in news this time for change in its pension policies.

IBM is reportedly proposing to close its final salary pension scheme to its current UK and Ireland staff. UNITE, the largest trade union in the UK, has reportedly warned the IT company of 'backlash' from thousands of employees over its decision which is likely to affect some quarter of its workforce. IBM UK has around 18,000 employees.

The news is said to have made hundreds of angry IBM employees join UNITE to fight IBM's decision to alter its pension scheme.

IBM closed the defined benefit, or final salary, pension plan to new employees a few years ago. The company says the move is to help the company "maintain competitiveness" in the tough economic climate.

Employees on final salary pensions are guaranteed a pension at the end of their career based earnings and length of service. Employees on a contribution scheme put money into an investment fund, which is used to buy a annual pension.

According to Unite's calculation employees in their mid-50s could lose up to £200,000 as a result of these changes compared with the retirement pension they had expected to draw before this announcement in July.

Recently, Japanese giant Fujitsu also announced its proposal to close its final salary scheme.

Tuesday, August 11, 2009


HP slashes EDS employees salary by 30%

Hewlett-Packard, the world's no. 1 PC manufacturer, has reportedly slashed the salaries of EDS employees by 30 per cent.

HP, which bought Texas-based EDS in May 2008, reportedly termed the cuts a part of its efforts to integrate EDS' consulting business and to bring EDS' salaries closer in line with similar HP positions.

The company is said to be working on a strategy to ensure that employees in both EDS and HP holding the similar positions receive the same compensation.

According to a company statement, "As part of the EDS integration process, a project was undertaken to ensure that employees in both EDS and HP, holding the same roles, receive comparable compensation based on market rates. While pay will not be impacted for the majority of employees as a result of this process, some employees will receive pay reductions while others will benefit from salary increases."

Earlier in April, California-based HP instituted a one-month, 10 per cent pay cut for EDS employees in the US and Puerto Rico with salaries in excess of $40,000. The company had then told the employees that no permanent salary cuts are being considered.

After posting poor fiscal results in February, HP announced across the board pay cuts for all its employees in the range of 2.5 per cent to 20 per cent.

In May 2008, HP signed a deal to acquire IT outsourcer EDS for $13.9 billion, or $25.00 per share. The deal helped expand HP's IT services business and catapult it to the number two spot close behind IBM in IT services.

Thursday, August 6, 2009

MindTree to cut salary of about 200 R&D staff by 15%

Bangalore-based IT firm MindTree today said it will cut salary by 15 per cent of about 200 staff in the research and development (R&D) division to reduce costs amid the global economic slowdown.

"The utilisation levels had fallen below 60 per cent and hence the decision to cut salary by 15 per cent was taken. This would be applicable on employees in the R&D services, who are neither on an customer-approved project nor on an internally-approved project," MindTree Senior Vice-President and Global Head (People Function) Puneet Jetli told PTI.

The cut would be applicable from August 1, 2009, and affect about 150-200 people, he added. MindTree employs 1,100 people in the R&D division.

"This salary cut is, however, for a short-term. The salaries will be restored if the employee gets assigned to a customer project or the utilisation levels cross the threshold of 65 per cent," Jetli added.

He said selective pay cut was better than measures like layoffs, across-the-board pay cuts or putting people on the 'virtual pool'.

Jetli said the company expected a turnaround soon. "There are signs of recovery. There might not be a drastic growth, but the situation is stabilising," he added.

Despite a net profit of Rs 54.54 crore in the first quarter of FY'10, MindTree, in view of the continued uncertainty in global markets, has revised its revenue guidance for this fiscal to USD 255-270 million.