Satyamites, who were moved to the virtual pool recently, are in for more trouble now. With the company agreeing to credit only the basic salary into their accounts for the next few months, the pressure of EMIs is mounting on them as in most of the cases basic pay is not enough to cover EMI.
Many employees under Virtual Pool Programme (VPP) of the IT firm who took home, personal or car loans are either worried or planning to sell their properties. Senior bank officials are admitting that associates are in for tough times and banks are in "no position to help them."
"I have a Rs 25 lakh home loan for which I pay Rs 33,000 per month as EMI. As of today my salary stands at a little over Rs 10,000 and I have no idea how I am going to pay my installments," said a middle level associate who has only managed to pay Rs 2.5 lakh of the loan amount so far. "I will personally meet the bank officials and see if something can be worked out wherein I can get a relief for six months and resume payment of my EMIs from the seventh month," the associate added.
However, bank officials said, "A gap of six months will mean more interest, and at the end the person will have to pay a higher EMI. If the interest rate increases, it would mean a double whammy for the associate," said a senior banker.
Knowing well that there is little that banks can do, some associates are packing their bags to leave Hyderabad. "The EMI for my education loan is about Rs 10,000 per month and my basic is much lesser. I am leaving for my hometown so that I can save living expenses to pay for my EMIs," said a fresher.
Showing posts with label Cost cutting. Show all posts
Showing posts with label Cost cutting. Show all posts
Monday, June 22, 2009
Friday, June 19, 2009
Cost cutting, TCS
You may end up staring at a closed TCS door because the IT company with over one lakh employee base has decided to freeze hiring and only make an exception if need arises. After all, the commitments of last year are already weighing heavy on company's financial health.
S Mahalingam, CFO of TCS, said, “Because of the last year offers there will be an additional employee cost. We will honour no more increments.”
Employees form almost 50 per cent of the total cost for a company like TCS, therefore TCS is not just freezing fresh hiring, it’s also coming down heavily on overhead costs. "There will be no increase in infrastructure company. We will move into SEZs," Mahalingam said.
Well, it’s not just TCS that’s on a hiring freeze. Industry sources say that the IT sector has seen a drop in hiring by more than 20 per cent in the last one year. Combine that with layoffs and deferred campus recruitments, clearly the IT pack is on an aggressive cost cutting mode.
TCS freezes hiring, no more increments
Source: ndtv.com
TCS has decided to freeze hiring and only make an exception if need arises. The commitments of last year are already weighing heavy on company's financial health. The largest Indian IT company, TCS, is also one of the largest employment generators in India. It offered over 24,000 jobs last year, but for all you professionals graduating this year need to be prepared for the worst.You may end up staring at a closed TCS door because the IT company with over one lakh employee base has decided to freeze hiring and only make an exception if need arises. After all, the commitments of last year are already weighing heavy on company's financial health.
S Mahalingam, CFO of TCS, said, “Because of the last year offers there will be an additional employee cost. We will honour no more increments.”
Employees form almost 50 per cent of the total cost for a company like TCS, therefore TCS is not just freezing fresh hiring, it’s also coming down heavily on overhead costs. "There will be no increase in infrastructure company. We will move into SEZs," Mahalingam said.
Well, it’s not just TCS that’s on a hiring freeze. Industry sources say that the IT sector has seen a drop in hiring by more than 20 per cent in the last one year. Combine that with layoffs and deferred campus recruitments, clearly the IT pack is on an aggressive cost cutting mode.
Cost cutting, IT market, Recession
Patni Computer Systems intends to bring down its operating costs by up to $25 million (Rs 118 crore) this year through a slew of austerity measures. “Everybody is taking a hard look as to how every dollar is being spent. When there is very less visibility on your topline you have to focus on the visibility you (have) on the bottomline by reducing costs,” Mr Jeya Kumar, Chief Executive Officer, told Business Line.
Mr Kumar came on board the country’s sixth largest software vendor last December after a global search that lasted two years. Prior to joining Patni, he was CEO of MphasiS and before that headed the $5.5-billion services business of Sun Microsystems.
Staff utilisation
As part of its endeavour to cut costs, Patni is trying to increase employee utilisation by reducing bench strength. The number of employees on the company’s bench is down by half, from 1,600 people to 800-odd, said Mr Kumar.
So will the company look at cutting employee salaries? “We have not taken a call on that yet. However, at this point all options are open,” he said.
Infrastructure costs
The Mumbai-based Patni is also evaluating options to combine some of its offices and overseas development centres to reduce infrastructure overheads.
“We are looking at integrating within the cities that we operate in,” said Mr Kumar.
Patni has started consolidating its delivery centres in Mumbai and Noida; its four delivery centres in Noida will be merged into two by September this year. “The company is renting some space in Mumbai, which we would look to consolidate. We also have space in Bangalore and Chennai that could be optimised,” he said.
Globally, Patni has 27 sales offices and 22 delivery centres.
For the year ended December 2008, Patni had reported expenditure of Rs 1,236 crore. However, Patni would not scale down its sales and marketing endeavours, as the company needs to be prepared for the future, he said.
Mr Kumar has set ‘extending coverage’, in terms of both geographies and sub-verticals, as one of the key targets for Patni.
On recovery in the IT industry, he said, “Whenever somebody asks me when they expect a recovery, I tell them by December. But December of which year, I do not know.”
The length and breadth of this recession would completely reshape the offshoring industry in India, he feels.
“The matrix for success will have to change. It will not be based on the number of bodies that you have but on the kind of IP. I expect companies to generate revenues from services that do not exist today,” he said.
Patni Computer looks to cut operating costs by Rs 118 cr
“When there is very less visibility on your topline you have to focus on the visibility you (have) on the bottomline by reducing costs.” — Mr Jeya Kumar, CEO
Mr Kumar came on board the country’s sixth largest software vendor last December after a global search that lasted two years. Prior to joining Patni, he was CEO of MphasiS and before that headed the $5.5-billion services business of Sun Microsystems.
Staff utilisation
As part of its endeavour to cut costs, Patni is trying to increase employee utilisation by reducing bench strength. The number of employees on the company’s bench is down by half, from 1,600 people to 800-odd, said Mr Kumar.
So will the company look at cutting employee salaries? “We have not taken a call on that yet. However, at this point all options are open,” he said.
Infrastructure costs
The Mumbai-based Patni is also evaluating options to combine some of its offices and overseas development centres to reduce infrastructure overheads.
“We are looking at integrating within the cities that we operate in,” said Mr Kumar.
Patni has started consolidating its delivery centres in Mumbai and Noida; its four delivery centres in Noida will be merged into two by September this year. “The company is renting some space in Mumbai, which we would look to consolidate. We also have space in Bangalore and Chennai that could be optimised,” he said.
Globally, Patni has 27 sales offices and 22 delivery centres.
For the year ended December 2008, Patni had reported expenditure of Rs 1,236 crore. However, Patni would not scale down its sales and marketing endeavours, as the company needs to be prepared for the future, he said.
Mr Kumar has set ‘extending coverage’, in terms of both geographies and sub-verticals, as one of the key targets for Patni.
On recovery in the IT industry, he said, “Whenever somebody asks me when they expect a recovery, I tell them by December. But December of which year, I do not know.”
The length and breadth of this recession would completely reshape the offshoring industry in India, he feels.
“The matrix for success will have to change. It will not be based on the number of bodies that you have but on the kind of IP. I expect companies to generate revenues from services that do not exist today,” he said.
Thursday, June 18, 2009
Cost cutting, IT market, Layoffs in India
Hexaware, Mastek bring benchers back to work
Hexaware Technologies and Mastek, two leading mid-sized IT firms from Mumbai, have reduced the size of their virtual bench – a term used to describe IT professionals not working on projects and having been handed pay cuts. “Both Hexaware and Mastek have begun placing some of their benched staff on projects,” said industry officials. IT analysts told Financial Chronicle that this only shows early signs of a revival in the domestic IT industry.
Both had announced creation of a virtual bench in their respective companies in March 2009. Hexaware had announced to place around 350 people on virtual bench, as they were “non-billable” and had their salaries reduced 2-10 per cent. Mastek had put around 425 people on virtual bench. At present, the number of people on the virtual bench has gone below 150 in Hexaware, while Mastek has seen a reduction of 15-20 per cent.
“What is happening is that the companies are seeing some business trickling in from their clients,” said Sudin Apte, an analyst with research firm Forrester. He, however, said that no major deal had been announced in the recent past.
“With new business opportunities and enhancement on projects, we have recalled many employees from the virtual bench,” said Deependra Chumble, chief people officer of Hexaware.
Hexaware typically calls back employees when it knows about the orders in the pipeline. “We put them on a refresher course after which they start working on a particular project,” added Chumble.
Mastek’s head of human resource, Kalpana Jaishankar said, “We have reduced the bench size by 15-20 per cent. Around 10-15 per cent of the employees put on bench have quit.” Jaishankar added that the project pipeline looks optimistic. In certain cases, Mastek has seen extension of existing projects.
Hexaware has also seen some people quit from its bench. “There were a few benched employees who found alternate jobs. We took the decision of either letting them go or retaining them based on the forecast we have taken,” said Chumble.
Both had announced creation of a virtual bench in their respective companies in March 2009. Hexaware had announced to place around 350 people on virtual bench, as they were “non-billable” and had their salaries reduced 2-10 per cent. Mastek had put around 425 people on virtual bench. At present, the number of people on the virtual bench has gone below 150 in Hexaware, while Mastek has seen a reduction of 15-20 per cent.
“What is happening is that the companies are seeing some business trickling in from their clients,” said Sudin Apte, an analyst with research firm Forrester. He, however, said that no major deal had been announced in the recent past.
“With new business opportunities and enhancement on projects, we have recalled many employees from the virtual bench,” said Deependra Chumble, chief people officer of Hexaware.
Hexaware typically calls back employees when it knows about the orders in the pipeline. “We put them on a refresher course after which they start working on a particular project,” added Chumble.
Mastek’s head of human resource, Kalpana Jaishankar said, “We have reduced the bench size by 15-20 per cent. Around 10-15 per cent of the employees put on bench have quit.” Jaishankar added that the project pipeline looks optimistic. In certain cases, Mastek has seen extension of existing projects.
Hexaware has also seen some people quit from its bench. “There were a few benched employees who found alternate jobs. We took the decision of either letting them go or retaining them based on the forecast we have taken,” said Chumble.
Wednesday, June 17, 2009
Cost cutting, Satyam
Satyamites check out of high-cost centres
Satyam Computer Services has started the process of shifting associates from its leased facilities in various centres to its owned ones as part of its widespread cost-cutting measures.
Satyam would be moving a sizable chunk of its employees from high-cost to low-cost centres. Other financial prudence measures adopted by the Hyderabad-based company include cutting remunerations and staff allowances.
About 3,500 Satyam associates, who presently work in rented buildings, would be moved to two company-owned campuses in the city, a person close to the development told Financial Chronicle. The company, at present, has eight leased facilities in Hyderabad.
Four leased properties in Hyderabad, three in Bangalore and two in Chennai are a part of the exercise. “Annual savings through this exercise could amount to about Rs.100 crore,” the person said. “The measures may also be adopted in offshore centres in the future, though a timeframe has not been decided.”
The shifted employees would be accommodated in the buffer capacity that Satyam has at its centres.
Satyam would be moving a sizable chunk of its employees from high-cost to low-cost centres. Other financial prudence measures adopted by the Hyderabad-based company include cutting remunerations and staff allowances.
About 3,500 Satyam associates, who presently work in rented buildings, would be moved to two company-owned campuses in the city, a person close to the development told Financial Chronicle. The company, at present, has eight leased facilities in Hyderabad.
Four leased properties in Hyderabad, three in Bangalore and two in Chennai are a part of the exercise. “Annual savings through this exercise could amount to about Rs.100 crore,” the person said. “The measures may also be adopted in offshore centres in the future, though a timeframe has not been decided.”
The shifted employees would be accommodated in the buffer capacity that Satyam has at its centres.
Monday, June 15, 2009
BPO, Cost cutting, Infosys
Infosys BPO hires from smaller cities to cut costs
As the economic slowdown hit most sectors, cost rationalisation has become imperative for companies to survive. In this exclusive report Sunanda Jayaseelan get us the story of the Infosys BPO in Bangalore and how they are reviewing their HR strategy to save costs.
It maybe a late entrant into the domestic market, but Infosys BPO is hoping to catch up fast. and to do that, it is adopting an aggressive policy to save costs.
Senior VP & Head - Global Delivery, Infosys BPO, Swami Swaminathan said, “If you look at Indian companies, the level of intensity of skills that you require is less and therefore we are able to hire from Tier 3 and 4 cities and get those folks here and the cost is less.
It is hiring employees from tier 3 and 4 towns instead of top cities, and is offering salaries 10-15 per cent lower than its counterparts. It hopes that cut in training costs and lower rentals in smaller towns will add up to 30 per cent cost efficiencies. This is going to be its strategy to expand its presence as well.
CEO, Infosys BPO Amitabh Chaudhry said, “The Indian BPO market will only grow rapidly over the next 5-7years. We expect to double our revenues from this market going ahead especially the SG&A kind of activities will only increase.
This approach seems to be a win-win for both Infosys BPO and the employees....for employees, the carrot is that they will not have to work night shifts. For Infosys BPO, …. it gives them the advantage of hiring employees at a lower cost now who over a period of 24months will be ready to service even international clients.
It maybe a late entrant into the domestic market, but Infosys BPO is hoping to catch up fast. and to do that, it is adopting an aggressive policy to save costs.
Senior VP & Head - Global Delivery, Infosys BPO, Swami Swaminathan said, “If you look at Indian companies, the level of intensity of skills that you require is less and therefore we are able to hire from Tier 3 and 4 cities and get those folks here and the cost is less.
It is hiring employees from tier 3 and 4 towns instead of top cities, and is offering salaries 10-15 per cent lower than its counterparts. It hopes that cut in training costs and lower rentals in smaller towns will add up to 30 per cent cost efficiencies. This is going to be its strategy to expand its presence as well.
CEO, Infosys BPO Amitabh Chaudhry said, “The Indian BPO market will only grow rapidly over the next 5-7years. We expect to double our revenues from this market going ahead especially the SG&A kind of activities will only increase.
This approach seems to be a win-win for both Infosys BPO and the employees....for employees, the carrot is that they will not have to work night shifts. For Infosys BPO, …. it gives them the advantage of hiring employees at a lower cost now who over a period of 24months will be ready to service even international clients.
Cost cutting
Yahoo hires `cost-cutting specialist'
Yahoo Inc has hired a cost-cutting specialist as its new chief financial officer, signaling the Internet company's determination to weed out the bureaucracy that has been dragging down its profits for the past three years.
The Sunnyvale-based company said that it had lured Tim Morse away from Altera Corp, a computer chip maker based in nearby San Jose. He became Altera's CFO in 2007 after a 15-year career at General Electric Co, where he held various jobs.
Morse's hiring ends Yahoo's 3 1/2-month search to replace its current CFO Blake Jorgensen, who announced his plans to leave a few weeks after the company hired Carol Bartz as its new chief executive.
Since she took the job in January, Bartz has been focused on streamlining Yahoo's management as she tries to remove stumbling blocks that have contributed to the company's inability to keep pace with more nimble rivals such as Internet search leader Google Inc and the online social hangout Facebook Inc.
Morse seems likely to shake things up even more at Yahoo, said Global Crown Capital analyst David Wu. "If Carol Bartz wants a leaner and meaner Yahoo, then she got the right guy," said Wu, who followed Morse while he was at Altera. "His mantra is 'Cost control is a journey, not a destination.' And the journey never seems to end for him."
With Morse overseeing the finances, Altera's selling, general and administrative expenses dropped 16 percent from more than $304 million in 2006 to $255 million last year.
Even before she picked her new CFO, Bartz began to pare Yahoo's expenses by laying off 700 employees, or about 5 percent of the work force.
Bartz has said she doesn't anticipate another mass layoff this year, and Morse's experience at Altera suggests he can extract significant savings without pruning the payroll. Altera ended 2008 with more than 2,700 employees, slightly more than the company employed before Morse became CFO.
In a prepared statement, Bartz described Morse as "natural fit" for Yahoo and hailed his ability "to translate strategy into structure, process, and execution."
Morse will join Yahoo next week, with Jorgensen still there to help with the transition. Jorgensen, who spent just two years at Yahoo, will depart with a $1.8 million severance package when he leaves the company at the end of the month. He is set to become CFO of jeans maker Levi Strauss & Co. beginning July 1.
Yahoo is paying Morse a $500,000 salary — a 33 percent raise from his paycheck at Altera. Morse also is getting a $500,000 signing bonus, 400,000 shares of stock options and 150,000 shares of restricted stock.
Morse appears to be the last major piece of the management team that Bartz has put together in the latest attempt to boost Yahoo's fortunes.
Although its Web site remains one of the busiest on the Internet, Yahoo has had trouble capitalizing on its popularity as its revenue growth slowed and its profits sagged — much to the dismay of its shareholders.
Bartz, a tough-talking executive from the computer software industry, is the third CEO in two years to try to end Yahoo's funk. During the malaise, Microsoft Corp. last year made an unsuccessful $47.5 billion bid to buy Yahoo.
Microsoft has said it remains open to joining forces with Yahoo in an online search partnership, but Bartz has indicated a deal is unlikely to come together any time soon.
Yahoo shares fell 13 cents Thursday to close at $16.19, leaving the company with a market value of about $23 billion.
The Sunnyvale-based company said that it had lured Tim Morse away from Altera Corp, a computer chip maker based in nearby San Jose. He became Altera's CFO in 2007 after a 15-year career at General Electric Co, where he held various jobs.
Morse's hiring ends Yahoo's 3 1/2-month search to replace its current CFO Blake Jorgensen, who announced his plans to leave a few weeks after the company hired Carol Bartz as its new chief executive.
Since she took the job in January, Bartz has been focused on streamlining Yahoo's management as she tries to remove stumbling blocks that have contributed to the company's inability to keep pace with more nimble rivals such as Internet search leader Google Inc and the online social hangout Facebook Inc.
Morse seems likely to shake things up even more at Yahoo, said Global Crown Capital analyst David Wu. "If Carol Bartz wants a leaner and meaner Yahoo, then she got the right guy," said Wu, who followed Morse while he was at Altera. "His mantra is 'Cost control is a journey, not a destination.' And the journey never seems to end for him."
With Morse overseeing the finances, Altera's selling, general and administrative expenses dropped 16 percent from more than $304 million in 2006 to $255 million last year.
Even before she picked her new CFO, Bartz began to pare Yahoo's expenses by laying off 700 employees, or about 5 percent of the work force.
Bartz has said she doesn't anticipate another mass layoff this year, and Morse's experience at Altera suggests he can extract significant savings without pruning the payroll. Altera ended 2008 with more than 2,700 employees, slightly more than the company employed before Morse became CFO.
In a prepared statement, Bartz described Morse as "natural fit" for Yahoo and hailed his ability "to translate strategy into structure, process, and execution."
Morse will join Yahoo next week, with Jorgensen still there to help with the transition. Jorgensen, who spent just two years at Yahoo, will depart with a $1.8 million severance package when he leaves the company at the end of the month. He is set to become CFO of jeans maker Levi Strauss & Co. beginning July 1.
Yahoo is paying Morse a $500,000 salary — a 33 percent raise from his paycheck at Altera. Morse also is getting a $500,000 signing bonus, 400,000 shares of stock options and 150,000 shares of restricted stock.
Morse appears to be the last major piece of the management team that Bartz has put together in the latest attempt to boost Yahoo's fortunes.
Although its Web site remains one of the busiest on the Internet, Yahoo has had trouble capitalizing on its popularity as its revenue growth slowed and its profits sagged — much to the dismay of its shareholders.
Bartz, a tough-talking executive from the computer software industry, is the third CEO in two years to try to end Yahoo's funk. During the malaise, Microsoft Corp. last year made an unsuccessful $47.5 billion bid to buy Yahoo.
Microsoft has said it remains open to joining forces with Yahoo in an online search partnership, but Bartz has indicated a deal is unlikely to come together any time soon.
Yahoo shares fell 13 cents Thursday to close at $16.19, leaving the company with a market value of about $23 billion.
Friday, June 12, 2009
Cost cutting, Layoffs in India, Satyam
Satyam to send upto 10,000 home with pay cut
Satyam Computer Services on Thursday unveiled a plan, which will see it sidestep the sensitive issue of sacking staff, but help save large sums of money in salaries, as its new owner Tech Mahindra attempts to put the fraud-hit company back on the rails.
Up to 10,000 employees, or about a fourth of the staff, will be allowed to join a “virtual pool” by taking time off from work on sharply reduced pay for up to six months starting next week.
The plan is expected to save the Hyderabad-based company, which now has some 41,600 staff, Rs 1 crore every day. Satyam spent around Rs 500 crore on salaries in February, and staff costs account for more than half of the company’s expenses.
Employees, who have not been part of revenue-earning assignments, at least, for the past three months, including support staff, will join the “virtual pool”. Around 14,000 employees are counted among the company’s non-billable resources.
“These employees will draw around 40-45% of their current salary, including medical insurance and provident fund benefits, for six months. We will have a review after that,” Tech Mahindra CEO and Satyam director Vineet Nayyar told ET.
Satyam has promised that the employment status of staff in its “virtual pool” will remain unchanged and they could be recalled to join with full pay based on business needs.
“A virtual pool is a tried and tested practice, particularly among multinational companies. Many employees, who do not want to lose jobs in premium companies, are happy with such offers. This is a good move from Satyam’s standpoint, combined to meet the challenges in a business cycle and mitigate human pain,” observed Ajit Isaac, managing director of HR outsourcing firm Human Capital Solutions.
A Satyam statement said the “virtual pool” is a one-time programme, suggesting that further drastic measures to trim staff costs may not be needed.
Former Nasscom president Kiran Karnik, a government-appointed nominee on the board of Satyam, said containing costs is imperative if the company has to be saved from going under.
“Most IT companies are looking at ways to cope with surplus staff and we reckon this is an innovative way of retaining the excellent human assets despite the difficult global economic situation. We need to ensure that the company becomes financially viable,” he told ET.
But some employees of Satyam were unimpressed, believing that the “virtual pool” is just another way of handing out pink slips of a very light shade. “It is a politically acceptable way of doing layoffs,” an employee remarked on condition of anonymity.
Up to 10,000 employees, or about a fourth of the staff, will be allowed to join a “virtual pool” by taking time off from work on sharply reduced pay for up to six months starting next week.
The plan is expected to save the Hyderabad-based company, which now has some 41,600 staff, Rs 1 crore every day. Satyam spent around Rs 500 crore on salaries in February, and staff costs account for more than half of the company’s expenses.
Employees, who have not been part of revenue-earning assignments, at least, for the past three months, including support staff, will join the “virtual pool”. Around 14,000 employees are counted among the company’s non-billable resources.
“These employees will draw around 40-45% of their current salary, including medical insurance and provident fund benefits, for six months. We will have a review after that,” Tech Mahindra CEO and Satyam director Vineet Nayyar told ET.
Satyam has promised that the employment status of staff in its “virtual pool” will remain unchanged and they could be recalled to join with full pay based on business needs.
“A virtual pool is a tried and tested practice, particularly among multinational companies. Many employees, who do not want to lose jobs in premium companies, are happy with such offers. This is a good move from Satyam’s standpoint, combined to meet the challenges in a business cycle and mitigate human pain,” observed Ajit Isaac, managing director of HR outsourcing firm Human Capital Solutions.
A Satyam statement said the “virtual pool” is a one-time programme, suggesting that further drastic measures to trim staff costs may not be needed.
Former Nasscom president Kiran Karnik, a government-appointed nominee on the board of Satyam, said containing costs is imperative if the company has to be saved from going under.
“Most IT companies are looking at ways to cope with surplus staff and we reckon this is an innovative way of retaining the excellent human assets despite the difficult global economic situation. We need to ensure that the company becomes financially viable,” he told ET.
But some employees of Satyam were unimpressed, believing that the “virtual pool” is just another way of handing out pink slips of a very light shade. “It is a politically acceptable way of doing layoffs,” an employee remarked on condition of anonymity.
Cost cutting, Satyam
Reserve pool with reduced pay best way to cut costs: Satyam
The option of putting surplus employees into a reserve pool with reduced pay is an innovative model with a humane touch to address the issue of flab in IT companies, Satyam CEO A S Murty said on Thursday.
"In our current situation, we have a seizable number of associates who are not on billable assignments, while business support and strategic support units have to contend with reduced activity/scale. The 'people cost' as a percentage of our revenues has therefore increased dramatically," Murthy said in his address to associates.
He further said the Satyam board today approved an innovative and humane model to address this crisis, which we have christened as Virtual Pool Program (VPP). "It is a one- time exercise that allows our "excess" talent pool in India, to be retained albeit for a defined period of time (4-6 months) and at a reduced pay," he said.
He further said the company is burdened with the onerous responsibility of lowering costs while retaining key talent, an "understandably challenging proposition". People-related costs account for almost 60 per cent of revenues in the IT industry.
Associates on VPP may be recalled anytime during this period, based on clearly articulated and objective criteria, to meet emerging business needs. Salary and other terms and conditions as prior to the VPP period will also be restored, he added.
"In our current situation, we have a seizable number of associates who are not on billable assignments, while business support and strategic support units have to contend with reduced activity/scale. The 'people cost' as a percentage of our revenues has therefore increased dramatically," Murthy said in his address to associates.
He further said the Satyam board today approved an innovative and humane model to address this crisis, which we have christened as Virtual Pool Program (VPP). "It is a one- time exercise that allows our "excess" talent pool in India, to be retained albeit for a defined period of time (4-6 months) and at a reduced pay," he said.
He further said the company is burdened with the onerous responsibility of lowering costs while retaining key talent, an "understandably challenging proposition". People-related costs account for almost 60 per cent of revenues in the IT industry.
Associates on VPP may be recalled anytime during this period, based on clearly articulated and objective criteria, to meet emerging business needs. Salary and other terms and conditions as prior to the VPP period will also be restored, he added.
Tuesday, June 9, 2009
Cost cutting
Industry experts say that the downturn has hit on the bargaining power of employees and a new entrant into a company may have to settle for less if he is hard pressed for a job.
Asked whether firms were taking advantage of the downturn and trying to squeeze more work in less pay, KPMG Partner and Head of People and Change Advisory Services Ganesh Shermon told media that taking advantage can be positive or negative.
"Negative side is a definite trend. More work at same pay (means) -- longer working hours, extended week days to week ends, tougher travel norms, lower level jobs, Saturday working, depleted training, shorter lunch breaks, continuing threat perception of job loss," Shermon said.
Further, he added that taking advantage in the positive way include practices such as sabbatical leave, learning systems, development center initiatives, personal coaching, re skilling, leadership development.
"The only advantage that companies are looking at deriving out of this situation of downturn, is that they are concentrating on hiring candidates with the right levels of competence and have stopped submitting to over-demanding candidates," Laurent & Benon Management Consultants director Aman Syal said.
Any sensible company even today realizes that satisfied employees are the only key to success but it would not be wrong to say "that companies have become intolerant towards non performers", Syal added.
PricewaterhouseCoopers India Leader for People and Change practice R Sankar believes both employer and employee need to be pragmatic and think long-term during these times of downturn.
"Employees must also remember they have had a pretty good run over the years and must be prepared to accept less when the going is tough. In the worst case, the choice is stark: keep your job by accepting less, or lose it altogether," Sankar added.
Shermon further said that receiving a fair salary is relative to the situation and only a year back in a sellers market employees were demanding twice of what their job was worth.
"This is now turn of employers or buyers market. Exception to such exploitative practices would be companies such as Unilever, IBM, Coke, Wal-Mart. It is really some Delhi-based companies in construction, real estate, infrastructure, entertainment who have excessively manipulated their employees to suit their valuation dreams," Shermon pointed out.
Asked about the criterion a fair salary, PwC's Sankar said that it the one that is sustainable from an employer's viewpoint, in attracting and retaining the talent needed to achieve business goals.
While, for the employee, a fair salary is one that is broadly in line with the market for his skills and that rewards him for superior performance.
Laurent & Benon Management's Syal advised a job seeker in these times to look at a compensation which would help him/her survive decently and concentrate on things like suitability of role, growth prospects and SWOT analysis of the employer.
However, he said companies were not taking advantage of the downturn to squeeze more work, as the effort to achieve higher levels of productivity is on-going and can never be said to have reached an end and in a competitive global scenario, this is a continuous process.
Is downturn forcing firms to squeeze more work in less pay?
Source:EconomicTimes
At a time when India Inc is tackling the global downturn and the job market is gloomy, experts believe some companies may be squeezing more work out of employees for lesser pay.Industry experts say that the downturn has hit on the bargaining power of employees and a new entrant into a company may have to settle for less if he is hard pressed for a job.
Asked whether firms were taking advantage of the downturn and trying to squeeze more work in less pay, KPMG Partner and Head of People and Change Advisory Services Ganesh Shermon told media that taking advantage can be positive or negative.
"Negative side is a definite trend. More work at same pay (means) -- longer working hours, extended week days to week ends, tougher travel norms, lower level jobs, Saturday working, depleted training, shorter lunch breaks, continuing threat perception of job loss," Shermon said.
Further, he added that taking advantage in the positive way include practices such as sabbatical leave, learning systems, development center initiatives, personal coaching, re skilling, leadership development.
"The only advantage that companies are looking at deriving out of this situation of downturn, is that they are concentrating on hiring candidates with the right levels of competence and have stopped submitting to over-demanding candidates," Laurent & Benon Management Consultants director Aman Syal said.
Any sensible company even today realizes that satisfied employees are the only key to success but it would not be wrong to say "that companies have become intolerant towards non performers", Syal added.
PricewaterhouseCoopers India Leader for People and Change practice R Sankar believes both employer and employee need to be pragmatic and think long-term during these times of downturn.
"Employees must also remember they have had a pretty good run over the years and must be prepared to accept less when the going is tough. In the worst case, the choice is stark: keep your job by accepting less, or lose it altogether," Sankar added.
Shermon further said that receiving a fair salary is relative to the situation and only a year back in a sellers market employees were demanding twice of what their job was worth.
"This is now turn of employers or buyers market. Exception to such exploitative practices would be companies such as Unilever, IBM, Coke, Wal-Mart. It is really some Delhi-based companies in construction, real estate, infrastructure, entertainment who have excessively manipulated their employees to suit their valuation dreams," Shermon pointed out.
Asked about the criterion a fair salary, PwC's Sankar said that it the one that is sustainable from an employer's viewpoint, in attracting and retaining the talent needed to achieve business goals.
While, for the employee, a fair salary is one that is broadly in line with the market for his skills and that rewards him for superior performance.
Laurent & Benon Management's Syal advised a job seeker in these times to look at a compensation which would help him/her survive decently and concentrate on things like suitability of role, growth prospects and SWOT analysis of the employer.
However, he said companies were not taking advantage of the downturn to squeeze more work, as the effort to achieve higher levels of productivity is on-going and can never be said to have reached an end and in a competitive global scenario, this is a continuous process.
Friday, May 29, 2009
Cost cutting, Layoffs in India, Satyam, severance package
Satyam to sweeten layoff terms
A majority of the 10,000 excess staff at Satyam Computer Services are set to be offered 40% of their salary for six months in what can be termed as a severance package being firmed up by the beleaguered IT firm.
The top management of Satyam, in consultation with its new owner Tech Mahindra, has prepared a list of around 10,000 employees, who have not been billed for over six months now. These employees are set to be offered 40% of their existing salary for six months, along-with medical insurance and provident fund. But they may eventually have to leave the firm. Non-billable employees have been short-listed, as they do not bring in any revenues to the IT firm.
Raju had hired more number of employees to inflate revenues and profits of the firm, and the economic downturn has only compounded Satyam’s woes, forcing Tech Mahindra to look at a separation package for the excess staff in the Hyderabad-based outsourcer. Senior industry leader Kiran Karnik, who was chosen by the government to be on the Satyam board and salvage the firm, said unless substantial steps were taken to contain costs, Satyam could go under and risk the jobs of all employees.
The board had suggested a number of options to the new management, including organisation-wide salary cuts, keeping employees on a virtual bench and sending them on a sabbatical. In the last two cases, the company would have to pay only part of the salary to these employees.
Vineet Nayyar, the CEO of Tech Mahindra and now whole time director on Satyam, declared that the company had an excess staff of around 10,000. The employee strength at Satyam is reckoned to be around 42,000. It is likely to drop to 32,000, if the proposed plan to create a “virtual pool” is implemented. Non-billable employees across all levels will be impacted, though entry and middle levels will see more exits.
“We recognise that we have to deal with the situation and are exploring the most humane ways to tackle this issue,” said T Hari, global head marketing, Satyam Computer Services.
The company is talking to a dozen out-placement firms to help people, who are laid off to find new jobs. It is also planning to tie-up with engineering colleges for PG courses and would fund employees, who wish to enrol in these programmes.
A few companies have also written to Satyam to take some employees on board. Employees, who have been identified for layoffs, will also have access to all the training programs offered by Satyam, said Mr Hari. The company plans to have financial counsellors to help out those whose exits are imminent.
Source: TheEconomicTimes
The top management of Satyam, in consultation with its new owner Tech Mahindra, has prepared a list of around 10,000 employees, who have not been billed for over six months now. These employees are set to be offered 40% of their existing salary for six months, along-with medical insurance and provident fund. But they may eventually have to leave the firm. Non-billable employees have been short-listed, as they do not bring in any revenues to the IT firm.
Raju had hired more number of employees to inflate revenues and profits of the firm, and the economic downturn has only compounded Satyam’s woes, forcing Tech Mahindra to look at a separation package for the excess staff in the Hyderabad-based outsourcer. Senior industry leader Kiran Karnik, who was chosen by the government to be on the Satyam board and salvage the firm, said unless substantial steps were taken to contain costs, Satyam could go under and risk the jobs of all employees.
The board had suggested a number of options to the new management, including organisation-wide salary cuts, keeping employees on a virtual bench and sending them on a sabbatical. In the last two cases, the company would have to pay only part of the salary to these employees.
Vineet Nayyar, the CEO of Tech Mahindra and now whole time director on Satyam, declared that the company had an excess staff of around 10,000. The employee strength at Satyam is reckoned to be around 42,000. It is likely to drop to 32,000, if the proposed plan to create a “virtual pool” is implemented. Non-billable employees across all levels will be impacted, though entry and middle levels will see more exits.
“We recognise that we have to deal with the situation and are exploring the most humane ways to tackle this issue,” said T Hari, global head marketing, Satyam Computer Services.
The company is talking to a dozen out-placement firms to help people, who are laid off to find new jobs. It is also planning to tie-up with engineering colleges for PG courses and would fund employees, who wish to enrol in these programmes.
A few companies have also written to Satyam to take some employees on board. Employees, who have been identified for layoffs, will also have access to all the training programs offered by Satyam, said Mr Hari. The company plans to have financial counsellors to help out those whose exits are imminent.
Source: TheEconomicTimes
Thursday, May 28, 2009
Cost cutting
BT freezes salaries of all employees
BT Group, the UK’s largest phone company, shelved planned pay increases for executive directors as it froze salaries for all employees. The company also won’t pay any bonuses related to financial targets as the goals were missed, BT said in an annual report on its web site on Wednesday. Executive directors can still get some bonuses for improvements in customer service and on environmental and social targets, it said.
BT will make some “discretionary recognition payments” to some employees below board level, it said, adding that there won’t be any bonus payments in the global services unit.
The company on May 14 lowered its dividend after posting a fourth-quarter loss on costs to overhaul the global services division and said a further 15,000 jobs will be cut this year. It predicted today that the current economic conditions will “continue for some time.”
Bonuses won’t be out in paid in cash. Some executive directors will convert bonuses into shares while others have asked to receive no bonus at all this year.
BT will make some “discretionary recognition payments” to some employees below board level, it said, adding that there won’t be any bonus payments in the global services unit.
The company on May 14 lowered its dividend after posting a fourth-quarter loss on costs to overhaul the global services division and said a further 15,000 jobs will be cut this year. It predicted today that the current economic conditions will “continue for some time.”
Bonuses won’t be out in paid in cash. Some executive directors will convert bonuses into shares while others have asked to receive no bonus at all this year.
Monday, May 25, 2009
Citigroup, Cost cutting
Citigroup eyeing ways to trim IT costs
Citigroup is believed to be looking at ways to trim its IT costs. This could spell good news for Indian IT vendors like TCS and Wipro who count Citi as their top client.
The bank, which has been repeatedly bailed out by the US government, has undergone a major restructuring exercise of its business portfolio in the recent past. It is looking to integrate thousands of systems and cut down on application, maintenance and development (AMD) costs, said a source close to Citi.
This integration process will bring new business for Indian IT vendors like TCS, Wipro and Infosys as the bank is keen to outsource the process to save on costs. A Citi spokesperson said, "We have no detail on or confirmation of these developments at this moment."
While this could translate into new business contracts for Indian IT vendors, the existing AMD and IT services contract could see a 15-20% drop in budgets over the next 6-8 months.
After the acquisition of Citi's back-office CGSL in the second-half of 2008, TCS considers the bank as its top client accounting for 4.7% of its revenues in FY 2008-2009. This has dropped by 1.5% since the first quarter.
However, a TCS spokesperson declined to comment on any specific client, while a Wipro spokesperson said, "We do not comment on speculative reports and we continue to partner with Citi in increasing diverse initiatives to improve the efficiency of their IT systems and operations."
The bank, which has been repeatedly bailed out by the US government, has undergone a major restructuring exercise of its business portfolio in the recent past. It is looking to integrate thousands of systems and cut down on application, maintenance and development (AMD) costs, said a source close to Citi.
This integration process will bring new business for Indian IT vendors like TCS, Wipro and Infosys as the bank is keen to outsource the process to save on costs. A Citi spokesperson said, "We have no detail on or confirmation of these developments at this moment."
While this could translate into new business contracts for Indian IT vendors, the existing AMD and IT services contract could see a 15-20% drop in budgets over the next 6-8 months.
After the acquisition of Citi's back-office CGSL in the second-half of 2008, TCS considers the bank as its top client accounting for 4.7% of its revenues in FY 2008-2009. This has dropped by 1.5% since the first quarter.
However, a TCS spokesperson declined to comment on any specific client, while a Wipro spokesperson said, "We do not comment on speculative reports and we continue to partner with Citi in increasing diverse initiatives to improve the efficiency of their IT systems and operations."
Saturday, May 23, 2009
Cost cutting, Layoffs in India, Satyam, severance package
Satyam employees may get 9 months severance package with pink slips
According to sources:
Severance package may include: 3 months full salary and 6 months half of the salary. Satyam may offer (those 10K employees who will be laid off in June) back to join the company if there are new projects after 9 months. In the mean time, they can join with another company or they can try for Satyam.
Satyam’s new owner Tech Mahindra hinted at a possible reduction in staff as it said on Friday that the company has 10,000 excess employees and revenues are coming down.
“Some form of a least painful way of reduction in staff is an option which will have to be looked at,” said Tech Mahindra’s CEO, Mr Vineet Nayyar, after the board meeting of government-appointed Satyam directors and officials of Tech Mahindra.
Mr Nayyar said that some sacrifices will have to be made (in order to run the company successfully). “If Satyam failed, some 40,000 people would be out of jobs,” he said.
Tech Mahindra unit Venturbay Consultants had taken controlling stake in Satyam in April. However, Satyam’s chairman, Mr Kiran Karnik, said that the company is not looking at mass lay-offs. It is exploring the sabbatical and a virtual bench strategy as measures to cut costs. “Without a doubt, revenue is on a downward trend, there is definitely stress on the bottom line. We are hoping to pick up, but the pick-up will not happen immediately,” said Mr Karnik.
He said that the customer side has become stable. The board meeting discussed measures to cut costs. Mr Karnik said that Satyam had high operating costs and the new owner would decide on how to bring it down. He said that it would take KPMG and Deloitte six months to restate the accounts.
Meanwhile four nominee directors of Tech Mahindra, including Mr Nayyar, were on Friday appointed on the board of Satyam Computers, with effect from June 1.
Severance package may include: 3 months full salary and 6 months half of the salary. Satyam may offer (those 10K employees who will be laid off in June) back to join the company if there are new projects after 9 months. In the mean time, they can join with another company or they can try for Satyam.
Satyam’s new owner Tech Mahindra hinted at a possible reduction in staff as it said on Friday that the company has 10,000 excess employees and revenues are coming down.
“Some form of a least painful way of reduction in staff is an option which will have to be looked at,” said Tech Mahindra’s CEO, Mr Vineet Nayyar, after the board meeting of government-appointed Satyam directors and officials of Tech Mahindra.
Mr Nayyar said that some sacrifices will have to be made (in order to run the company successfully). “If Satyam failed, some 40,000 people would be out of jobs,” he said.
Tech Mahindra unit Venturbay Consultants had taken controlling stake in Satyam in April. However, Satyam’s chairman, Mr Kiran Karnik, said that the company is not looking at mass lay-offs. It is exploring the sabbatical and a virtual bench strategy as measures to cut costs. “Without a doubt, revenue is on a downward trend, there is definitely stress on the bottom line. We are hoping to pick up, but the pick-up will not happen immediately,” said Mr Karnik.
He said that the customer side has become stable. The board meeting discussed measures to cut costs. Mr Karnik said that Satyam had high operating costs and the new owner would decide on how to bring it down. He said that it would take KPMG and Deloitte six months to restate the accounts.
Meanwhile four nominee directors of Tech Mahindra, including Mr Nayyar, were on Friday appointed on the board of Satyam Computers, with effect from June 1.
Cost cutting, Layoffs in India, Satyam
Satyam looking at measures to cut costs
Concerned over rising cost hitting the revenue, Satyam Computer on Friday said it is looking at cutting down costs. "The customer front is good, stable. But costs are high... the revenues would be less," company Chairman Kiran Karnik told reporters after a meeting with the board members and officials of Tech Mahindra, which is taking over Satyam Computer.
The company today discussed a host of cost-cutting measures that can be explored. Tech Mahindra Chief Executive Vineet Nayyar said Satyam had 10,000 excess employees in its 40,000-strong headcount.
"The company has 10,000 excess staff. We are looking at least painful ways to take care of this," Nayyar said.
On the other hand, Karnik said the company is not looking at layoffs, it is exploring sabbatical and virtual bench strategy.
Karnik said today's meeting discussed the challenges to the bottomline, how to handle (excess) people, HR and real estate among others.
Satyam witnessed a flurry of client loss following its disgraced founder Ramalinga Raju's admission to multi-crore rupees accounting fraud in January.
Today Satyam shares surged by 11.54 per cent on the BSE.
Last month, Tech Mahindra had acquired 51 per cent in the Hyderabad-listed Satyam through an auction for Rs 2,099 crore.
Karnik said the new auditors Deloitte and KPMG made presentation today at the meeting and said it would take minimum six months for restatement of company's accounts.
On the protracted legal battle with UK-based mobile solution firm Upaid, Nayyar said an out-of-court settlement is favourable and the company would explore that option.
Meanwhile, in a filing to the Bombay Stock Exchange, Satyam said four nominee directors of Tech Mahindra, including its Chief Executive Vineet Nayyar, have been today appointed on the board of the company, with effect from June 1.
The other three nominee directors on behalf of Venturbay Consultants (an arm of Tech Mahindra), include C P Gurnani, Sanjay Kalra and Ulhas N Yargop, Satyam said.
Gurnani currently heads Tech Mahindra's global operations, Kalra is President Strategic Initiatives while Yargop is President for IT sector and a member of the Group Management Board of Mahindra & Mahindra.
"Following the effectiveness of the appointment of Venbturbay Directors, there will be a total of 10 directors on the board," Satyam said.
In January the government had appointed Kiran Karnik, Deepak Parekh, C Achuthan, Tarun Das, T N Manoharan and S Balakrishna Mainak on the board of Satyam Computer after its founder Ramalinga Raju disclosed of a multi-crore financial fraud in the company's books of accounts.
The company today discussed a host of cost-cutting measures that can be explored. Tech Mahindra Chief Executive Vineet Nayyar said Satyam had 10,000 excess employees in its 40,000-strong headcount.
"The company has 10,000 excess staff. We are looking at least painful ways to take care of this," Nayyar said.
On the other hand, Karnik said the company is not looking at layoffs, it is exploring sabbatical and virtual bench strategy.
Karnik said today's meeting discussed the challenges to the bottomline, how to handle (excess) people, HR and real estate among others.
Satyam witnessed a flurry of client loss following its disgraced founder Ramalinga Raju's admission to multi-crore rupees accounting fraud in January.
Today Satyam shares surged by 11.54 per cent on the BSE.
Last month, Tech Mahindra had acquired 51 per cent in the Hyderabad-listed Satyam through an auction for Rs 2,099 crore.
Karnik said the new auditors Deloitte and KPMG made presentation today at the meeting and said it would take minimum six months for restatement of company's accounts.
On the protracted legal battle with UK-based mobile solution firm Upaid, Nayyar said an out-of-court settlement is favourable and the company would explore that option.
Meanwhile, in a filing to the Bombay Stock Exchange, Satyam said four nominee directors of Tech Mahindra, including its Chief Executive Vineet Nayyar, have been today appointed on the board of the company, with effect from June 1.
The other three nominee directors on behalf of Venturbay Consultants (an arm of Tech Mahindra), include C P Gurnani, Sanjay Kalra and Ulhas N Yargop, Satyam said.
Gurnani currently heads Tech Mahindra's global operations, Kalra is President Strategic Initiatives while Yargop is President for IT sector and a member of the Group Management Board of Mahindra & Mahindra.
"Following the effectiveness of the appointment of Venbturbay Directors, there will be a total of 10 directors on the board," Satyam said.
In January the government had appointed Kiran Karnik, Deepak Parekh, C Achuthan, Tarun Das, T N Manoharan and S Balakrishna Mainak on the board of Satyam Computer after its founder Ramalinga Raju disclosed of a multi-crore financial fraud in the company's books of accounts.
Friday, May 22, 2009
Cost cutting
But early indicators show IT exporters may not fight shy of it in FY10, if the market situation in the US does not improve and if they come under pressure due to a stronger rupee.
Some of the smaller IT firms, such as the RPG Group-owned Zensar Technologies, have tweaked their variable pay structure starting FY10. The firm has introduced a variable pay component of 15% for junior-level employees, and revised the variable pay structure at the middle and senior-management levels.
Under the new structure, the variable pay component has been hiked for employees in the senior management from 20% to 35% and for mid-management employees from 10% to 25-30% of their salaries. The variable pay at the CEO-level is highest at 55% and there has been no change in that. Zensar vice-chairman and CEO Ganesh Natarajan said the new structure would reward performers.
The IT industry has been under pressure to manage costs, and in the past two quarters of FY09, profit growth has come from prudent cost management as much as from higher revenues.
“In FY09, I estimate the top firms would have paid between 85% and 90% of their variable pay. In the current fiscal, this could be 60-70%, especially if the rupee appreciates,” said Edelweiss Securities VP-research Viju George.
A recent calculation by ET showed employee costs accounting for 60-80% of the total operating expenses with variable pay accounting for 10-15% of the total employee expenses for a large number of IT firms. In other words, a 50% cut in variable pay would translate to a bottomline impact of 10-20%.
“The ability to adjust the variable component gives you some amount of leeway to handle the uncertainties and also inculcates a performance culture,” TCS global head (HR) Ajoy Mukherjee told ET.
While the variable pay component is higher at the senior levels, most firms have now changed the structure, which allows even junior level employees to have a variable pay component in their salary.
For TCS, the variable pay is around 30% of the salary on an average — this is across the company. It is similar for Infosys Technologies, where the variable pay is around 30% of offshore salaries.
IT cos may cut variable pay to manage costs
Source: TheEconomicTimes
Indian IT companies have refrained from going in for significant variable pay cuts of their employees in FY09. TCS, for instance, paid out 95% of its variable pay to 95% of the staff in FY09.But early indicators show IT exporters may not fight shy of it in FY10, if the market situation in the US does not improve and if they come under pressure due to a stronger rupee.
Some of the smaller IT firms, such as the RPG Group-owned Zensar Technologies, have tweaked their variable pay structure starting FY10. The firm has introduced a variable pay component of 15% for junior-level employees, and revised the variable pay structure at the middle and senior-management levels.
Under the new structure, the variable pay component has been hiked for employees in the senior management from 20% to 35% and for mid-management employees from 10% to 25-30% of their salaries. The variable pay at the CEO-level is highest at 55% and there has been no change in that. Zensar vice-chairman and CEO Ganesh Natarajan said the new structure would reward performers.
The IT industry has been under pressure to manage costs, and in the past two quarters of FY09, profit growth has come from prudent cost management as much as from higher revenues.
“In FY09, I estimate the top firms would have paid between 85% and 90% of their variable pay. In the current fiscal, this could be 60-70%, especially if the rupee appreciates,” said Edelweiss Securities VP-research Viju George.
A recent calculation by ET showed employee costs accounting for 60-80% of the total operating expenses with variable pay accounting for 10-15% of the total employee expenses for a large number of IT firms. In other words, a 50% cut in variable pay would translate to a bottomline impact of 10-20%.
“The ability to adjust the variable component gives you some amount of leeway to handle the uncertainties and also inculcates a performance culture,” TCS global head (HR) Ajoy Mukherjee told ET.
While the variable pay component is higher at the senior levels, most firms have now changed the structure, which allows even junior level employees to have a variable pay component in their salary.
For TCS, the variable pay is around 30% of the salary on an average — this is across the company. It is similar for Infosys Technologies, where the variable pay is around 30% of offshore salaries.
Thursday, May 21, 2009
Cost cutting
Panasonic to cut top execs' pay 30%
Japan's Panasonic Corp plans to cut the annual pay of its president and chairman in the current business year by 30 per cent to take responsibility for the company's projected financial deficit in fiscal 2009, company sources said today.
The pay cuts will target president Fumio Otsubo and chairman Kunio Nakamura, and other board members will see their pay slashed 20 per cent, they said.
The Japanese electronics giant incurred a group net loss of 378.96 billion yen in fiscal 2008, its first deficit in six years, and is also expecting a second straight annual net loss totaling 195 billion yen for fiscal 2009.
Panasonic, formerly Matsushita Electric Industrial Co, had already cut remuneration for board members between 10 to 20 per cent and for those on managerial positions by five per cent since February due to the deterioration of its corporate performance.
Further top management pay cuts are part of the electronics maker's restructuring efforts that include cutting 15,000 jobs and closing a total of 40 production facilities worldwide by the end of fiscal 2009.
The pay cuts will target president Fumio Otsubo and chairman Kunio Nakamura, and other board members will see their pay slashed 20 per cent, they said.
The Japanese electronics giant incurred a group net loss of 378.96 billion yen in fiscal 2008, its first deficit in six years, and is also expecting a second straight annual net loss totaling 195 billion yen for fiscal 2009.
Panasonic, formerly Matsushita Electric Industrial Co, had already cut remuneration for board members between 10 to 20 per cent and for those on managerial positions by five per cent since February due to the deterioration of its corporate performance.
Further top management pay cuts are part of the electronics maker's restructuring efforts that include cutting 15,000 jobs and closing a total of 40 production facilities worldwide by the end of fiscal 2009.
Wednesday, May 20, 2009
Cost cutting, Infosys
Infosys to cancel home loan facility
The cup of troubles for tech employees is overflowing. After companies have cut-back on salaries and perks given to employees, Infosys Technologies is planning to withdraw its home loan facility for employees with effect from 1 July, according to an internal mail from the company.
Infosys, which values each employee at nearly Rs 1 crore, has been providing interest free home loans to needy employees for several years. So far over 2,000 employees (with experience of five years and above) have availed the loan facility accounting for a cumulative disbursements of Rs 80 crore, company officials said.
However, later the scheme was converted into an “interest allowance,” wherein a portion of the home loan interest is borne by the company, which could be considered as an equivalent of a perk.
Infosys, which values each employee at nearly Rs 1 crore, has been providing interest free home loans to needy employees for several years. So far over 2,000 employees (with experience of five years and above) have availed the loan facility accounting for a cumulative disbursements of Rs 80 crore, company officials said.
However, later the scheme was converted into an “interest allowance,” wherein a portion of the home loan interest is borne by the company, which could be considered as an equivalent of a perk.
Thursday, May 14, 2009
Cost cutting, Satyam
Satyam shuts one of the office in Hyderabad
Satyam Computers is now scaling down its operations in the city. It has shut one office in Somajiguda and is in the process of vacating its Karkhana premises as well. The company has already vacated the three floors occupied by it in the Lakeshower Towers (popularly known as LST) in Somajiguda.
According to sources in the company, this move is part of the firm’s cost cutting measures as the lease of both these units are up for renewal soon and the company, in its current financial state, cannot afford to run so many offices. Until recently Satyam had 14 working units in the city.
Sources add that the IT firm had begun working towards the closure of these units a few weeks ago by shifting out staffers stationed at these two places to its other offices. Employees based out of LST were shifted either to the TSR Towers office in Somajiguda or the two units in Madhapur, while those working at the Karkhana branch in Secunderabad are now being moved out to the Satyam Technology Centre (STC) in Bahadurpally, which incidentally is also the global headquarters of the firm.
"This unit was expected to shut down by the end of April itself. But now we hear that the process will take another month or so," said an employee working at the Karkhana branch. He added that the branch with a strength of around 500 staff, primarily houses people on the bench and those working on some internal projects. "While those on projects are being shifted out to STC, we fear that those on the bench will be shown the door before they shut shop," said another employee stationed at the branch. The LST office, that now lies vacant, housed the finance department of the IT firm among a few other smaller sections.
While the expiry of lease appears to be the prime reason for closing down the two units, sources indicate that a huge chunk of people stationed at these offices have also quit the firm over the last few months, cutting down on billable operations being carried out in these units.
"Hence I feel that the company sees no point in running these two places where productivity has fallen considerably," said a senior employee.
The news of these units closing down has added to the concerns of Satyamites who now fear further layoffs and pay cuts. Employees stationed at STC also fear that this shift might cause overcrowding at their unit and could leave several staffers without terminals to work on.
According to sources in the company, this move is part of the firm’s cost cutting measures as the lease of both these units are up for renewal soon and the company, in its current financial state, cannot afford to run so many offices. Until recently Satyam had 14 working units in the city.
Sources add that the IT firm had begun working towards the closure of these units a few weeks ago by shifting out staffers stationed at these two places to its other offices. Employees based out of LST were shifted either to the TSR Towers office in Somajiguda or the two units in Madhapur, while those working at the Karkhana branch in Secunderabad are now being moved out to the Satyam Technology Centre (STC) in Bahadurpally, which incidentally is also the global headquarters of the firm.
"This unit was expected to shut down by the end of April itself. But now we hear that the process will take another month or so," said an employee working at the Karkhana branch. He added that the branch with a strength of around 500 staff, primarily houses people on the bench and those working on some internal projects. "While those on projects are being shifted out to STC, we fear that those on the bench will be shown the door before they shut shop," said another employee stationed at the branch. The LST office, that now lies vacant, housed the finance department of the IT firm among a few other smaller sections.
While the expiry of lease appears to be the prime reason for closing down the two units, sources indicate that a huge chunk of people stationed at these offices have also quit the firm over the last few months, cutting down on billable operations being carried out in these units.
"Hence I feel that the company sees no point in running these two places where productivity has fallen considerably," said a senior employee.
The news of these units closing down has added to the concerns of Satyamites who now fear further layoffs and pay cuts. Employees stationed at STC also fear that this shift might cause overcrowding at their unit and could leave several staffers without terminals to work on.
Wednesday, May 13, 2009
Cost cutting, Layoffs in India, Satyam
Cost Cutting: Axe to fall on Satyam staff
Satyam Computers is all set face the inevitable: a drastic costcutting exercise, which includes layoff of 5,000strong non-billable staff. Tech Mahindra, the new owner of the fraud-hit IT major, has prescribed a $200-million cost-cutting pill to get Satyam back to financial health.
According sources in the company, Tech Mahindra would place its cost-cutting measures, which includes a three phased layoff plan, before the Satyam board on May 15 for approval.
In the first phase, the layoffs will be effected in administration, human resource, and marketing. Support staff will face the axe in the second phase and the bench strength would be pruned in the final leg.
The first to be hit would be the support staff in the Satyam BPO, which would see layoffs this month. “Some of the employees are already on the bench, who will be laid off immediately.
The new management is also planning to entrust Satyam BPO’s HR and marketing functions to Satyam team and wind up Satyam BPO support staff,” the sources said.
The company has an ‘obscene’ ratio of support staff against the productive staff. “At present, this is 1:35 in Satyam, but the industry is now running at 1:80 ratio,” said the source adding that surplus nonbillable staff has already been identified.
Figures available with Satyam indicate that nearly 3,000 employees are on the bench on different projects as nearly 15-20 clients have cut short their operations in business processing. “This has necessitated fresh costcutting measures,” a Satyam employee said.
According sources in the company, Tech Mahindra would place its cost-cutting measures, which includes a three phased layoff plan, before the Satyam board on May 15 for approval.
In the first phase, the layoffs will be effected in administration, human resource, and marketing. Support staff will face the axe in the second phase and the bench strength would be pruned in the final leg.
The first to be hit would be the support staff in the Satyam BPO, which would see layoffs this month. “Some of the employees are already on the bench, who will be laid off immediately.
The new management is also planning to entrust Satyam BPO’s HR and marketing functions to Satyam team and wind up Satyam BPO support staff,” the sources said.
The company has an ‘obscene’ ratio of support staff against the productive staff. “At present, this is 1:35 in Satyam, but the industry is now running at 1:80 ratio,” said the source adding that surplus nonbillable staff has already been identified.
Figures available with Satyam indicate that nearly 3,000 employees are on the bench on different projects as nearly 15-20 clients have cut short their operations in business processing. “This has necessitated fresh costcutting measures,” a Satyam employee said.
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