Source: EconomicTimes
Five years ago, when 18-year-old Mithilesh proudly announced that software programming was going to be his life’s calling, the only name his father, Ramesh Kumar Sinha, could think of was Bill Gates.
“I had heard he was the richest man in the world. So I thought may be Mithilesh will someday get to work at Microsoft,” says the 53-year-old, who works in his small farm in Madhubhani in north Bihar, a district where every second person is illiterate.
Mithilesh had his own reasons to be a code-jock. In the neighbourhood, he already knew one person who “studied computers” and went on to work in the US. And his was the first house in the village to have that quintessential middle-class accouterment—a flat-screen television.
The lad knew the software industry was the gateway to the middle class and Bangalore the gateway to the software industry. So he zeroed in on an engineering college in India’s tech capital, secured an education loan and enrolled for a BTech course in 2004. He was hoping to join the privileged 2.5 million or so for whom software was a calling and who were the cream of India’s new middle class.
“A job with an IT company was always considered a holy cow and if you did not have this job profile, then you were lower down in the caste ladder,” says Manish Sabharwal, who heads staffing firm TeamLease.
But three years and a downturn later, Mithilesh today faces the prospect of being added to the ranks of the 70,000-odd engineering students unlikely to secure a job this year.
The global economic slowdown and the recession in the software industry’s main market in the US had forced top IT employers such as Infosys, TCS and Wipro to more or less freeze new hiring. Students with offer letters were asked to wait.
“If I had known there would be no demand for fresh engineering graduates by the time I pass my course, I would have taken up chartered accountancy,” says Mithilesh, who now looks to his farmer father to repay the Rs 3.5-lakh loan. Thoughts of flat-screen televisions are furthest from his mind.
With tech companies sneezing, businesses banking on the new entrants to the middle class such as Mithilesh to drive consumption have caught a cold. The economic reforms of the early 1990s and the IT boom of the last decade have been a significant force in the expansion of India’s middle class, estimated to have grown to 300 million people today from 150 million in the late 1980s and early 1990s.
The nouveau middle class created by the software industry drove up demand and created jobs in sectors such as autos, consumer goods, retail, housing and entertainment. They triggered property booms in cities such as Chennai, Hyderabad and Bangalore. Today, commercial and residential rentals in the IT hubs of Chennai and Bangalore have come down by nearly a third.
Those with a severe cold are India’s engineering colleges, which are seeing a steep drop in the demand for courses in information technology. According to S Mohammed Tajudeen, who handles placements at Crescent Engineering College in Chennai, there are 30% fewer applicants for courses in IT while the numbers of those opting for computer science has dropped by a tenth.
The capitation fee that private colleges used to charge for IT-related streams has dropped by over 50% this year, says another placement officer on condition of anonymity.
Mohandas Pai, HR director at Infosys, observes that what the public sector was in the 1970s and the 1980s in terms of job generation, the IT sector became starting late 1990s. Despite the troubles it is facing now, he is confident that employment in the tech industry will be the career of choice for millions of young Indians.
Shiv Visvanathan, a social scientist and senior fellow at Centre for the Study of Developing Societies, New Delhi, says IT is different from others because of its boom and bust cycles. “There are ups and downs that people need to realise,” he says.
While some of Mithilesh’s seniors from college have already taken up low-paying jobs at call centres to pay back their loans, he says he will wait. He hopes his name will figure among the 100,000 professionals that software industry group, Nasscom, says will be added by tech firms by March 2010. India’s software firms hired about a quarter of a million professionals in the year to March 2009.
Abhay Tilak, 21, who graduated in 2008 from an engineering college in Chennai, had a letter offering him a job at software company MindTree in May last year. He is still waiting for the job. To keep the home fires burning he now works at a call center for Rs 6,000 per month.
“The MindTree job will pay better, but more importantly, I can do software coding instead of mindlessly attending calls. This job helps me support my family, but this is not what I did my engineering for,” he says. Mithilesh’s father, however, will not allow him to spend his nights answering calls from across the globe.
Leading IT companies told ET that it may take at least three years more for the industry to get back to the days of mass hiring, especially with TCS, Infosys and Wipro putting in place new delivery models which will allow them to serve more customers with fewer resources.
TeamLease’s Sabharwal says the IT industry is like a pyramid in terms of growth opportunities. “It is either up or out. The path upwards is very narrow and while the industry will continue to mass recruit for the base level, those at the middle level will find it difficult to grow,” he says.
While people like Mithilesh and Abhay cope with the new reality, they face the danger of becoming obsolete in terms of skills when the economy finally recovers. “By the time I get a job, there will be a huge backlog of freshers and people with 3-5 years of experience willing to work for lower pay,” says Mithilesh.
While Mithilesh lets the grass grow under his feet, he is in danger of losing out to people like Abhay, who have at least kept working. “Rather than waiting for your dream job, it is better to take up what opportunity you have,” advises Pratik Kumar, head of HR at Wipro.
Infosys’ Pai is more blunt: “A graduate who passed out this year has higher chances of being employed, especially if the 2008 graduate did not use the one year to keep himself skillfully occupied.”
Showing posts with label Cost cutting. Show all posts
Showing posts with label Cost cutting. Show all posts
Thursday, August 6, 2009
Monday, August 3, 2009
Cost cutting, Satyam
Mahindra Satyam places another 500 associates on the bench
Mahindra Satyam is on course to cut more flab to trim costs. After placing over 8,000 employees on the virtual pool, the company has now created a “corporate reserve” akin to a bench for over 500 associates. The move, however, sparked off speculation about possible exit of senior-level employees in the Hyderabad based outsourcing firm.
In an internal communication, the company said “associates belonging to the enterprise business competency (EBS) and those in sales, relationships, operations management, programme management, delivery integration, solution frameworks & presales will reside in the corporate reserve till allocations are made.
“With a transition to the new organisational design, some of the erstwhile units like vertical business units and horizontal competency units will cease to exist. Employees who have not been allocated any portfolio yet in the new organisation design will be placed in the unit called corporate reserve”, said T Hari Chief People’s Officer and Chief Marketing Officer of Mahindra Satyam.
According to him, there would only be a few hundred associates in the corporate reserve. “We are aware of the inconvenience that this could cause for the small set of associates, but request your understanding given the complexities of this large-scale exercise”, the communication stated.
Earlier, the company placed around 8,000 people on the virtual pool fort six months. The creation of a corporate reserve, according to analysts, is akin to placing employees on the bench. Scam tainted Satyam had around 42,000 employees on its rolls when the firm was acquired by Pune based Tech Mahindra.
In an internal communication, the company said “associates belonging to the enterprise business competency (EBS) and those in sales, relationships, operations management, programme management, delivery integration, solution frameworks & presales will reside in the corporate reserve till allocations are made.
“With a transition to the new organisational design, some of the erstwhile units like vertical business units and horizontal competency units will cease to exist. Employees who have not been allocated any portfolio yet in the new organisation design will be placed in the unit called corporate reserve”, said T Hari Chief People’s Officer and Chief Marketing Officer of Mahindra Satyam.
According to him, there would only be a few hundred associates in the corporate reserve. “We are aware of the inconvenience that this could cause for the small set of associates, but request your understanding given the complexities of this large-scale exercise”, the communication stated.
Earlier, the company placed around 8,000 people on the virtual pool fort six months. The creation of a corporate reserve, according to analysts, is akin to placing employees on the bench. Scam tainted Satyam had around 42,000 employees on its rolls when the firm was acquired by Pune based Tech Mahindra.
Friday, July 31, 2009
Cost cutting, Layoffs in India
Employees lay-offs least likely tool for cost cutting in India: Survey
Retrenchment of employees is the least likely cost-cutting tool for Indian companies, compared to their global peers, and they would be the first across the world to recommence regular salary revisions, a new survey said today.
According to the joint survey by global consultancy service provider Mercer and industry body CII, Indian companies were also increasingly using "innovative" incentive tools as a substitute for salary hikes to retain the talent, but were also cutting on employee mobility and travel to cut HR costs.
"Indian companies (are) least likely to consider retrenchment as a means to cut costs compared with (its) global counterparts," the survey said.
The survey explored the implications of the current global economic situation on talent management, compensation, benefits as well as on employee concerns and the HR functions.
It further said that war for skilled talent in India is set to make a comeback towards end of 2009.
In such unprecedented times Indian companies have been resilient, Mercer Consulting India Managing Director Ravichandar R Padma said adding that most Indian companies have managed to turn the downturn into an opportunity.
Most of the companies worldwide are resorting to job cuts as part of their efforts to bring down cost.
According to the joint survey by global consultancy service provider Mercer and industry body CII, Indian companies were also increasingly using "innovative" incentive tools as a substitute for salary hikes to retain the talent, but were also cutting on employee mobility and travel to cut HR costs.
"Indian companies (are) least likely to consider retrenchment as a means to cut costs compared with (its) global counterparts," the survey said.
The survey explored the implications of the current global economic situation on talent management, compensation, benefits as well as on employee concerns and the HR functions.
It further said that war for skilled talent in India is set to make a comeback towards end of 2009.
In such unprecedented times Indian companies have been resilient, Mercer Consulting India Managing Director Ravichandar R Padma said adding that most Indian companies have managed to turn the downturn into an opportunity.
Most of the companies worldwide are resorting to job cuts as part of their efforts to bring down cost.
Monday, July 27, 2009
Cost cutting, Layoffs in USA
AOL Tells Employees Job Cuts Possible After Review
AOL’s new Chief Executive Officer Tim Armstrong told employees today that job cuts are possible as he undertakes a 60-day review of the Internet company’s cost structure, a company spokeswoman said.
Armstrong said at a companywide meeting that he’s working on financial plans, and part of that process could include staff reductions, Tricia Primrose, a spokeswoman for AOL, said in an e-mail. She didn’t specify how many jobs may be eliminated.
After completing a 100-day review of AOL’s strategy, Armstrong said in an interview last week that he plans to overhaul advertising and develop more local Web sites to revive falling sales. Time Warner Inc. plans to spin off AOL, which employs about 7,000 people, into a separate, publicly traded company later this year.
Time Warner, based in New York, fell 30 cents to $27.58 at 4 p.m. in New York Stock Exchange composite trading. The shares have gained 24 percent this year. The possible cuts were reported earlier by Silicon Alley Insider.
Armstrong said at a companywide meeting that he’s working on financial plans, and part of that process could include staff reductions, Tricia Primrose, a spokeswoman for AOL, said in an e-mail. She didn’t specify how many jobs may be eliminated.
After completing a 100-day review of AOL’s strategy, Armstrong said in an interview last week that he plans to overhaul advertising and develop more local Web sites to revive falling sales. Time Warner Inc. plans to spin off AOL, which employs about 7,000 people, into a separate, publicly traded company later this year.
Time Warner, based in New York, fell 30 cents to $27.58 at 4 p.m. in New York Stock Exchange composite trading. The shares have gained 24 percent this year. The possible cuts were reported earlier by Silicon Alley Insider.
Cost cutting, Layoffs in India, Recession
Recession-hit Bangalore techies settle for low-paying jobs
Till a few months ago, IT professional TV George was earning Rs70,000 per month, plus perks. But after losing his high-paying job, and being unemployed for three months, George, 31, has started giving tuitions in mathematics and physics to aspiring engineering students in his neighbourhood.
"Now, I am earning Rs15,000 per month. It's been hard. I got married only a few months before losing my job. So, when I lost my job, I was in a difficult position. Thankfully, I had some savings. With the savings, I am paying my rent and for a few other necessities," George, who was employed with a top US IT company, said.
"After losing my job, I tried my best to get a new job. But I remained unlucky. So to help run my home, I decided to give coaching classes to aspiring engineering students."
George is not alone. Recession has hit the IT sector in Bangalore, with scores of techies losing their jobs. Some have been forced to take up low-paying jobs as they wait to bounce back when the recession ends.
Dipankar Dutta, 27, working with an Indian IT company as software engineer, lost his job almost eight months ago.
Today he has a job, but as a content writer in a tech firm.
"Thankfully, writing has been my forte. So, I landed this job of a content writer. Otherwise I would have been in a soup. Since I cannot afford to stay in Bangalore without a job, I compromised and settled for the new job with a much lower pay package," said Dutta.
Scores of IT and ITES professionals in Bangalore have lost their jobs in recent times, an effect of the global economic meltdown. But there is no precise count of the numbers.
According to the latest employment and business outlook report by Bangalore-based staffing firm Teamlease, at 23%, the attrition rate in this city is higher than in any other city in India.
The report was based on interviews with HR heads, CEOs and senior executives of 495 companies in Bangalore, Chennai, Hyderabad, Kolkata and Pune.
"The city accounted for the highest attrition rate. IT accounts for over 80% of the city's total labour pool. The attrition rate was 23% in the last quarter, against the previous quarter's 16%. Much of the attrition could be involuntary attrition (or layoffs)," Teamlease general manager Surabhi Mathur-Gandhi said.
India's Silicon Valley has seen thousands of people getting pink slips in recent months. And many more are under the threat of losing their jobs.
"It's painful to lose your job, in today's expensive world. Those who have lost their jobs are desperate now, thus they are settling for low paying jobs," Karthik Shekhar, general secretary of UNITES-Professionals, an unrecognised union of IT/Call Centre/BPO employees, said.
"Every day we meet young men and women who have lost their IT jobs recently. All they want is a job. But getting a job in the IT sector is very difficult. So, they have no option but to settle for jobs outside their fields and that too with low paying packages," Shekhar added.
"It's encouraging that today's youths are ready to move ahead in their lives. Instead of waiting for the economy to revive, IT professionals have started exploring other fields and this is a positive sign," said BN Gangadhar, professor of psychiatry at the National Institute of Mental Health and Neuro Sciences (Nimhans), Bangalore.
Mohammed Khan, a trained software engineer, told IANS: "Initially it was difficult, but I am happy with my choice. After losing my job with an IT firm, now I am working as a sales executive. I am hoping the economy will recover soon and all the techies who have lost their jobs will get new jobs in their field."
Source: TheTimesofIndia
"Now, I am earning Rs15,000 per month. It's been hard. I got married only a few months before losing my job. So, when I lost my job, I was in a difficult position. Thankfully, I had some savings. With the savings, I am paying my rent and for a few other necessities," George, who was employed with a top US IT company, said.
"After losing my job, I tried my best to get a new job. But I remained unlucky. So to help run my home, I decided to give coaching classes to aspiring engineering students."
George is not alone. Recession has hit the IT sector in Bangalore, with scores of techies losing their jobs. Some have been forced to take up low-paying jobs as they wait to bounce back when the recession ends.
Dipankar Dutta, 27, working with an Indian IT company as software engineer, lost his job almost eight months ago.
Today he has a job, but as a content writer in a tech firm.
"Thankfully, writing has been my forte. So, I landed this job of a content writer. Otherwise I would have been in a soup. Since I cannot afford to stay in Bangalore without a job, I compromised and settled for the new job with a much lower pay package," said Dutta.
Scores of IT and ITES professionals in Bangalore have lost their jobs in recent times, an effect of the global economic meltdown. But there is no precise count of the numbers.
According to the latest employment and business outlook report by Bangalore-based staffing firm Teamlease, at 23%, the attrition rate in this city is higher than in any other city in India.
The report was based on interviews with HR heads, CEOs and senior executives of 495 companies in Bangalore, Chennai, Hyderabad, Kolkata and Pune.
"The city accounted for the highest attrition rate. IT accounts for over 80% of the city's total labour pool. The attrition rate was 23% in the last quarter, against the previous quarter's 16%. Much of the attrition could be involuntary attrition (or layoffs)," Teamlease general manager Surabhi Mathur-Gandhi said.
India's Silicon Valley has seen thousands of people getting pink slips in recent months. And many more are under the threat of losing their jobs.
"It's painful to lose your job, in today's expensive world. Those who have lost their jobs are desperate now, thus they are settling for low paying jobs," Karthik Shekhar, general secretary of UNITES-Professionals, an unrecognised union of IT/Call Centre/BPO employees, said.
"Every day we meet young men and women who have lost their IT jobs recently. All they want is a job. But getting a job in the IT sector is very difficult. So, they have no option but to settle for jobs outside their fields and that too with low paying packages," Shekhar added.
"It's encouraging that today's youths are ready to move ahead in their lives. Instead of waiting for the economy to revive, IT professionals have started exploring other fields and this is a positive sign," said BN Gangadhar, professor of psychiatry at the National Institute of Mental Health and Neuro Sciences (Nimhans), Bangalore.
Mohammed Khan, a trained software engineer, told IANS: "Initially it was difficult, but I am happy with my choice. After losing my job with an IT firm, now I am working as a sales executive. I am hoping the economy will recover soon and all the techies who have lost their jobs will get new jobs in their field."
Source: TheTimesofIndia
Cost cutting, Recession, TCS
Worst may not be over yet, says TCS chief
Chief executive officer S Ramadorai has spent 13 years at the helm of Tata Consultancy Services (TCS). In this time, he has turned the company into the largest IT services provider in the country. As he prepares to bid adieu to the organisation in a couple of months, he spoke to Sharang Limaye about the present economic crisis and his post-retirement role. Excerpts:
Are ‘Green Shoots’ sprouting?
To some extent, it is true. We must see how it plays out. There are some signs of improvement. But we should not get carried away by these. One should be prepared for some more volatility. The volatility has not disappeared. There will still be some shocks along the way.
But is the worst over?
In terms of some parameters, the worst may not be over. For example, when you look at unemployment, it looks like more bad times are in store. We are still seeing increasing unemployment. When people see the banks performing well, they think there has been some recovery. But it remains to be seen whether it’s a one-off thing.
Do you see pricing pressure easing?
There is some extent of easing of pricing pressure. But, there may be specific sectors with pricing problems. Telecom, for one, will certainly experience some pressure. So also will manufacturing. Hi-tech may also find the going tough in terms of pricing. But this will be due to sector-specific issues.
Domestic market contribution to your turnover is less than 10 per cent. Will we see more focus on India?
We are anyway focusing on the domestic market. But we have to see how much Indian companies are ready to spend on information technology. Right now, the IT budgets are nowhere near what Western economies do. If the growth is not faster, then the contribution of the Indian business as a percentage would still be minimal.
What could be done to increase the size of the domestic market?
I have always said that the government must spend a lot. It’s the right time for it to work on digitisation of data at both the state and central levels. Consolidation of information in areas such as taxation, healthcare and education should be of high priority. This expenditure will show in the GDP growth and also lead to improvement of services.
What about the contribution of the domestic private sector?
If the Indian private sector wants to be globally competitive, technology adoption and deployment is a must. Also, in sectors like microfinance, IT can help in greater financial inclusion.
What’s the outlook for TCS from a human resource point of view?
There is recruitment at entry level jobs for the year 2009-10 based on the offers made in 2008-09. For the year 2010-11, recruitment will take place at the time of students’ graduation, unlike in the past where we did three or four quarter earlier. Experienced professionals will be hired on a need basis.
How do you see the European market doing this year?
Currently, Europe is facing bigger problems than the US. Countries like Germany, Italy, UK, Spain and Portugal have been under a lot of stress. To me, Europe is a very important market, but it will recover slower than the US.
Does TCS have an inorganic growth strategy?
We have a Mergers & Acquisitions (M&A) group for this purpose. But haven’t planned any acquisition strategy as such. The M&A group will continuously look at opportunities for synergies. If there is anything that makes sense from a growth perspective, we will look at it. But there is nothing in the pipeline as of now.
Is there a move to concentrate more on the retail vertical as compared to telecom and BFSI?
There are opportunities for growth in the retail sector. Hence, it is very important for us. Having said that, the IT spends in the BFSI sector are still the largest. We would like to have presence in multiple domains and geographies. Our new focus areas include healthcare, lifesciences, energy, utilities etc.
What are your plans post-retirement?
I will continue to be on the board of TCS. I am also on the board of other Tata companies as well as some non-group companies. I would continue mentoring people in TCS. I would also be involved in some brand-building exercises. I might have lesser time on my hands after retiring.
Source: FinancialChronicle
Are ‘Green Shoots’ sprouting?
To some extent, it is true. We must see how it plays out. There are some signs of improvement. But we should not get carried away by these. One should be prepared for some more volatility. The volatility has not disappeared. There will still be some shocks along the way.
But is the worst over?
In terms of some parameters, the worst may not be over. For example, when you look at unemployment, it looks like more bad times are in store. We are still seeing increasing unemployment. When people see the banks performing well, they think there has been some recovery. But it remains to be seen whether it’s a one-off thing.
Do you see pricing pressure easing?
There is some extent of easing of pricing pressure. But, there may be specific sectors with pricing problems. Telecom, for one, will certainly experience some pressure. So also will manufacturing. Hi-tech may also find the going tough in terms of pricing. But this will be due to sector-specific issues.
Domestic market contribution to your turnover is less than 10 per cent. Will we see more focus on India?
We are anyway focusing on the domestic market. But we have to see how much Indian companies are ready to spend on information technology. Right now, the IT budgets are nowhere near what Western economies do. If the growth is not faster, then the contribution of the Indian business as a percentage would still be minimal.
What could be done to increase the size of the domestic market?
I have always said that the government must spend a lot. It’s the right time for it to work on digitisation of data at both the state and central levels. Consolidation of information in areas such as taxation, healthcare and education should be of high priority. This expenditure will show in the GDP growth and also lead to improvement of services.
What about the contribution of the domestic private sector?
If the Indian private sector wants to be globally competitive, technology adoption and deployment is a must. Also, in sectors like microfinance, IT can help in greater financial inclusion.
What’s the outlook for TCS from a human resource point of view?
There is recruitment at entry level jobs for the year 2009-10 based on the offers made in 2008-09. For the year 2010-11, recruitment will take place at the time of students’ graduation, unlike in the past where we did three or four quarter earlier. Experienced professionals will be hired on a need basis.
How do you see the European market doing this year?
Currently, Europe is facing bigger problems than the US. Countries like Germany, Italy, UK, Spain and Portugal have been under a lot of stress. To me, Europe is a very important market, but it will recover slower than the US.
Does TCS have an inorganic growth strategy?
We have a Mergers & Acquisitions (M&A) group for this purpose. But haven’t planned any acquisition strategy as such. The M&A group will continuously look at opportunities for synergies. If there is anything that makes sense from a growth perspective, we will look at it. But there is nothing in the pipeline as of now.
Is there a move to concentrate more on the retail vertical as compared to telecom and BFSI?
There are opportunities for growth in the retail sector. Hence, it is very important for us. Having said that, the IT spends in the BFSI sector are still the largest. We would like to have presence in multiple domains and geographies. Our new focus areas include healthcare, lifesciences, energy, utilities etc.
What are your plans post-retirement?
I will continue to be on the board of TCS. I am also on the board of other Tata companies as well as some non-group companies. I would continue mentoring people in TCS. I would also be involved in some brand-building exercises. I might have lesser time on my hands after retiring.
Source: FinancialChronicle
Saturday, July 25, 2009
Cost cutting, Infosys
No cost-cutting in critical areas: Infosys
The Indian IT industry, which has grown rapidly due to innovation and low cost products, has not reduced strategic investment despite cutting costs, Infosys Technologies Chief Executive and Managing Director S Gopalakrishnan said.
Addressing a session on 'Role of Innovation in an Economic Downturn', organised by CII, he said that IT industry was still on a strong footing and bound to grow with more investment in research and development (R&D).
"We invest more in new services, value additions, new solutions and products, so that even if they don't pay now, they will pay later on. Though radical innovation is time consuming, it will definitely pay in the longer run," he said.
Though Indian companies were focusing on process innovations, they should switch over to product innovations, he said, adding Universities should also focus on R&D.
Indian companies were also buying companies located in the developed countries. This also helped them market their products globally and would also help to accelerate growth. "They can be successful and make a significant impact if they focus on new products and innovations also," he said.
Addressing a session on 'Role of Innovation in an Economic Downturn', organised by CII, he said that IT industry was still on a strong footing and bound to grow with more investment in research and development (R&D).
"We invest more in new services, value additions, new solutions and products, so that even if they don't pay now, they will pay later on. Though radical innovation is time consuming, it will definitely pay in the longer run," he said.
Though Indian companies were focusing on process innovations, they should switch over to product innovations, he said, adding Universities should also focus on R&D.
Indian companies were also buying companies located in the developed countries. This also helped them market their products globally and would also help to accelerate growth. "They can be successful and make a significant impact if they focus on new products and innovations also," he said.
Thursday, July 23, 2009
Cost cutting, Layoffs in India, Wipro
Nearly 5000 employees quit TCS
At a time when job losses are grabbing headlines, almost 5,000 employees of Tata Consultancy Services (TCS) have in fact left the company on their own. Last Friday during its quarterly results, the company announced that its annual attrition rate was at 11.5 percent.
The headcount of India's largest software exporter shrank despite a gross addition of staff. According to Hindustan Times, in the latest quarter TCS added a total of 2,828 employees with the total headcount of 1,43,761 at the start of the quarter. If the new hires are taken into consideration, the total employees strength should have reached 1,46,589 by the end of June. However, the firm's headcount was at 1,41,642 as of June 30, 2009, showing a net reduction of 4,947 employees.
A company spokesperson confirmed the staff decline but added that TCS's attrition levels were in line with the industry average. "Our attrition level has remained similar to what it was in the previous quarter. However, since we have controlled gross additions, the overall headcount has come down," said a TCS spokesperson.
The company is hiring fresh graduates as per need, but will honor the 24,885 campus offers it had made last financial year and those students would come on board only from the second quarter (July-September). "About 1,000 have joined this year and the rest would join in a phased manner throughout the year. We are also hiring overseas. For our newly opened Cincinnati campus, we are looking at hiring 250 people this year. For that we have made offers to 111 people from top universities, of which 99 have accepted and 38 already joined," the spokesperson said. Like its competitor Infosys, TCS decided to honor old commitments on campus recruitments while slowing down the hiring of new graduates. But lateral hiring of experienced staff is continuing, though on a low key.
It needs to be seen if these 5,000 employees have in fact quit voluntarily or were they forced to leave by the company.
The headcount of India's largest software exporter shrank despite a gross addition of staff. According to Hindustan Times, in the latest quarter TCS added a total of 2,828 employees with the total headcount of 1,43,761 at the start of the quarter. If the new hires are taken into consideration, the total employees strength should have reached 1,46,589 by the end of June. However, the firm's headcount was at 1,41,642 as of June 30, 2009, showing a net reduction of 4,947 employees.
A company spokesperson confirmed the staff decline but added that TCS's attrition levels were in line with the industry average. "Our attrition level has remained similar to what it was in the previous quarter. However, since we have controlled gross additions, the overall headcount has come down," said a TCS spokesperson.
The company is hiring fresh graduates as per need, but will honor the 24,885 campus offers it had made last financial year and those students would come on board only from the second quarter (July-September). "About 1,000 have joined this year and the rest would join in a phased manner throughout the year. We are also hiring overseas. For our newly opened Cincinnati campus, we are looking at hiring 250 people this year. For that we have made offers to 111 people from top universities, of which 99 have accepted and 38 already joined," the spokesperson said. Like its competitor Infosys, TCS decided to honor old commitments on campus recruitments while slowing down the hiring of new graduates. But lateral hiring of experienced staff is continuing, though on a low key.
It needs to be seen if these 5,000 employees have in fact quit voluntarily or were they forced to leave by the company.
Wednesday, July 22, 2009
Cost cutting, IT market, Outsourcing, Recession
UK offshored most IT jobs to India
In their attempt to cut costs amid the global downturn, two in every three UK-based firms have off-shored a portion of their IT functions in the last six months, with a large portion of it coming to India, a survey says.
According to a survey by an UK-based IT recruitment firm IT Job Board, 64 per cent of the companies surveyed have offshored a portion of their IT functions in the last six months.
About 34 per cent of the IT professionals said more than half of their IT department had already been shifted overseas and 79 per cent respondents said the work had been sent to India.
Exactly half of those surveyed believed their companies would offshore work and 75 per cent felt the work would go to India.
In terms of the roles being affected, 79 per cent thought software developer jobs were being outsourced, 71 per cent stated programmer roles, and 67 per cent advised IT support jobs were being impacted.
About 40 per cent believed the issue with offshoring was lack of business knowledge and 83 per cent felt it was having a negative impact on the quality of their IT.
According to a survey by an UK-based IT recruitment firm IT Job Board, 64 per cent of the companies surveyed have offshored a portion of their IT functions in the last six months.
About 34 per cent of the IT professionals said more than half of their IT department had already been shifted overseas and 79 per cent respondents said the work had been sent to India.
Exactly half of those surveyed believed their companies would offshore work and 75 per cent felt the work would go to India.
In terms of the roles being affected, 79 per cent thought software developer jobs were being outsourced, 71 per cent stated programmer roles, and 67 per cent advised IT support jobs were being impacted.
About 40 per cent believed the issue with offshoring was lack of business knowledge and 83 per cent felt it was having a negative impact on the quality of their IT.
Tuesday, July 21, 2009
Cost cutting, IT market, Layoffs in India, Recession
How Indian IT is fighting recession
The Indian IT industry managed to limit the impact of global recession last fiscal and maintain the growth momentum, albeit lower than that in the boom times, says tech publisher Dataquest.
"Export firms did better in recession-hit developed markets than those whose business is limited to the Indian market," Dataquest editor Prasanto K Roy said.
Though the business of top 20 firms led by Indian IT bellwethers TCS, Infosys and Wipro, and multinationals such as HP and IBM, grew by an average 19 per cent, seven of these posted single-digit revenue growth.
"Overall, the top 20 Indian software and hardware firms reported a combined revenue of Rs 183,621 crore (Rs 1.84 trillion/$39.52 billion) in 2009, compared to Rs 149,250 crore (Rs.1.49 trillion/$32.12 billion) in 2008," Roy said, citing findings of a survey.
Among the seven, four are multinational subsidiaries -- Microsoft India, which grew a mere one per cent year-on-year to Rs 32.98 billion (Rs 3,298 crore); HP India up two per cent to Rs 157.63 billion (Rs15,763 crore), Oracle three per cent to Rs 59.62 billion (Rs 5,962 crore) and Cisco by four per cent to Rs 60.84 billion (Rs 6,084 crore).
"One of the reasons for export-driven firms maintaining the growth is because of increasing IT outsourcing in a downturn to keep costs flexible. In the domestic market too, global firms such as IBM and Wipro fared very well," Roy averred.
Among the top 20 firms, eight firms grew fastest despite slowdown and negative sentiment in the market.
These include Mphasis, with revenues increasing 69 per cent to Rs 31.73 billion (Rs 3,173 crore); HCL Infosystems, up 60 per cent to Rs 80.89 billion (Rs 8,089 crore) and Cognizant Technologies, up 49 per cent to Rs 94.10 billion (Rs 9,410 crore).
The IT bellwethers also posted healthy growth rates. TCS was up 22 per cent to Rs 25,895 crore; Infosys, up 31 per cent to Rs 20,392 crore, and Wipro up 41 per cent to Rs 23,882 crore.
Multinationals such as SAP India grew 33 per cent to Rs 4,320 crore, Dell India by 32 per cent to Rs 4,266 crore, IBM India by 19 per cent to Rs 12,048 crore and Accenture by 16 per cent to Rs 4,400 crore.
With a decline of 18 per cent in its growth, hardware firm Lenovo failed to make it to the top 20 club. Korean major Samsung also saw growth falling 40 per cent to Rs 1,200 crore from Rs 2,014 crore.
Export revenues do not include that of business process outsourcing (BPO) services.
Scam-tainted Satyam Computer Services has been left out of the top 20, as its financial performance came under cloud following the Rs 78-billion (Rs 7,800-crore) accounting fraud by founder-chairman B Ramalinga Raju.
The Dataquest survey findings are lower than the projections made by the IT industry's representative body -- National Association of Software and Services Companies (Nasscom) -- for 2009-10.
With the industry's annual growth rate dipping to 16-17 per cent from about 30 per cent in 2004-2008, the aggregate revenues was estimated to be $60 billion, including export revenue of $47 billion.
In view of the prevailing uncertainty, Nasscom has taken a two-year view to factor in the volatile environment and estimated that the IT industry would grow at 15 per cent to achieve export revenue of $60-62 billion by 2010-11.
Source: IndiaTimes.com
"Export firms did better in recession-hit developed markets than those whose business is limited to the Indian market," Dataquest editor Prasanto K Roy said.
Though the business of top 20 firms led by Indian IT bellwethers TCS, Infosys and Wipro, and multinationals such as HP and IBM, grew by an average 19 per cent, seven of these posted single-digit revenue growth.
"Overall, the top 20 Indian software and hardware firms reported a combined revenue of Rs 183,621 crore (Rs 1.84 trillion/$39.52 billion) in 2009, compared to Rs 149,250 crore (Rs.1.49 trillion/$32.12 billion) in 2008," Roy said, citing findings of a survey.
Among the seven, four are multinational subsidiaries -- Microsoft India, which grew a mere one per cent year-on-year to Rs 32.98 billion (Rs 3,298 crore); HP India up two per cent to Rs 157.63 billion (Rs15,763 crore), Oracle three per cent to Rs 59.62 billion (Rs 5,962 crore) and Cisco by four per cent to Rs 60.84 billion (Rs 6,084 crore).
"One of the reasons for export-driven firms maintaining the growth is because of increasing IT outsourcing in a downturn to keep costs flexible. In the domestic market too, global firms such as IBM and Wipro fared very well," Roy averred.
Among the top 20 firms, eight firms grew fastest despite slowdown and negative sentiment in the market.
These include Mphasis, with revenues increasing 69 per cent to Rs 31.73 billion (Rs 3,173 crore); HCL Infosystems, up 60 per cent to Rs 80.89 billion (Rs 8,089 crore) and Cognizant Technologies, up 49 per cent to Rs 94.10 billion (Rs 9,410 crore).
The IT bellwethers also posted healthy growth rates. TCS was up 22 per cent to Rs 25,895 crore; Infosys, up 31 per cent to Rs 20,392 crore, and Wipro up 41 per cent to Rs 23,882 crore.
Multinationals such as SAP India grew 33 per cent to Rs 4,320 crore, Dell India by 32 per cent to Rs 4,266 crore, IBM India by 19 per cent to Rs 12,048 crore and Accenture by 16 per cent to Rs 4,400 crore.
With a decline of 18 per cent in its growth, hardware firm Lenovo failed to make it to the top 20 club. Korean major Samsung also saw growth falling 40 per cent to Rs 1,200 crore from Rs 2,014 crore.
Export revenues do not include that of business process outsourcing (BPO) services.
Scam-tainted Satyam Computer Services has been left out of the top 20, as its financial performance came under cloud following the Rs 78-billion (Rs 7,800-crore) accounting fraud by founder-chairman B Ramalinga Raju.
The Dataquest survey findings are lower than the projections made by the IT industry's representative body -- National Association of Software and Services Companies (Nasscom) -- for 2009-10.
With the industry's annual growth rate dipping to 16-17 per cent from about 30 per cent in 2004-2008, the aggregate revenues was estimated to be $60 billion, including export revenue of $47 billion.
In view of the prevailing uncertainty, Nasscom has taken a two-year view to factor in the volatile environment and estimated that the IT industry would grow at 15 per cent to achieve export revenue of $60-62 billion by 2010-11.
Source: IndiaTimes.com
Monday, July 20, 2009
Cost cutting, H1-B, NRIs, TCS
TCS recalls 1,200 from the US
In a bid to reduce costs and increased offshoring focus, Tata Consultancy Services (TCS), India’s largest information technology company, has recalled close to 1,200 employees from the US and has decided not to hand out any salary increment this year.
The company had announced a 10 per cent increment across the board during the last financial year. TCS has almost frozen its lateral (experienced) hiring and will look at this only on an as-required basis. Instead, it will hire fresh college pass-outs. Over the next three quarters, it will hire 24,885 young men and women from various campuses.
As large users of information technology services abroad have cut their budgets, companies like TCS have been looking at ways to control costs. Employees account for over 50 per cent of TCS’ revenue; hence, the company has relooked its salary bill and policy on hiring.
Though there will be no increments this year, employees will still get a component of their variable pay. “We have two components to the variable pay: One that is paid every month and the other that is paid at the end of the quarter. This quarter we will pay that as well,” said TCS Vice-president and Head (global human resources) Ajoy Mukherjee.
Mukherjee, however, added that the company will promote over 9,000 employees, who could not be promoted last year due to cost issues. “We were looking at this every quarter but it could not be done,” said Mukherjee.
TCS has also not filed for a single H1-B visa, which allows people to work in the US, till date this year. The company, as of now, has about 18,000 people with valid visas (H1-B and L1). “We do have sufficient people with valid visas. The 18,000 employees include those who are already in the US. Looking at this, we decided not to apply for any fresh H1-B visa,” said Mukherjee.
The company had announced a 10 per cent increment across the board during the last financial year. TCS has almost frozen its lateral (experienced) hiring and will look at this only on an as-required basis. Instead, it will hire fresh college pass-outs. Over the next three quarters, it will hire 24,885 young men and women from various campuses.
As large users of information technology services abroad have cut their budgets, companies like TCS have been looking at ways to control costs. Employees account for over 50 per cent of TCS’ revenue; hence, the company has relooked its salary bill and policy on hiring.
Though there will be no increments this year, employees will still get a component of their variable pay. “We have two components to the variable pay: One that is paid every month and the other that is paid at the end of the quarter. This quarter we will pay that as well,” said TCS Vice-president and Head (global human resources) Ajoy Mukherjee.
Mukherjee, however, added that the company will promote over 9,000 employees, who could not be promoted last year due to cost issues. “We were looking at this every quarter but it could not be done,” said Mukherjee.
TCS has also not filed for a single H1-B visa, which allows people to work in the US, till date this year. The company, as of now, has about 18,000 people with valid visas (H1-B and L1). “We do have sufficient people with valid visas. The 18,000 employees include those who are already in the US. Looking at this, we decided not to apply for any fresh H1-B visa,” said Mukherjee.
Cost cutting, Layoffs in India, TCS
Scope for cost cutting still exists, says TCS
Tata Consultancy Services (TCS), India’s largest IT firm, feels there is still scope for cost management, said CFO S Mahalingam. “We had initiated several mechanisms in the past few quarters and they have started to show results. We have put in a new organisational structure a year earlier. I would not like to depend just on cuts, but have a cost structure that will help in delivering the margins we have seen this quarter,” Mahalingam added.
TCS’ Q1 results for 2009-10 beat market expectations. Net profit rose 15 per cent and revenues grew half-a-per cent sequentially. The results were also impacted by a lower forex loss.
For Mahalingam, sustaining this growth over the next few quarters is a concern. “One of the biggest positives this quarter was no decline in revenue. There are some things that bother me. One, we need to completely focus on margins. Wewill need to diversify enough so that there is growth. Two, currency (value) remains an issue and, three; we are still in the cost growing area. How do we make sure that the cuts are sustained will be important,” he added.
TCS’ Q1 results for 2009-10 beat market expectations. Net profit rose 15 per cent and revenues grew half-a-per cent sequentially. The results were also impacted by a lower forex loss.
For Mahalingam, sustaining this growth over the next few quarters is a concern. “One of the biggest positives this quarter was no decline in revenue. There are some things that bother me. One, we need to completely focus on margins. Wewill need to diversify enough so that there is growth. Two, currency (value) remains an issue and, three; we are still in the cost growing area. How do we make sure that the cuts are sustained will be important,” he added.
Friday, July 17, 2009
Cost cutting, Layoffs in India, Recession
Corporate India optimistic, only 6 per cent firms cut pay
Amid the economic down-turn impacting companies worldwide, India Inc rema-ins cautiously optimistic with just 16 per cent firms freezing salaries and as low as 6 per cent reducing pays for 2009-10, a survey by HR consultancy Hewitt Associates says.
According to a mid-year survey on Performance & Reward Trends by Hewitt Associates, companies acr-oss industries are strongly differentiating rewards on the basis of performance but majority of them are not considering any layoffs or severe salary cuts in the present financial year.
“With only five per cent of the organisations consi-dering layoffs, minimal salary reduction at 6 per cent and salary freeze at 16 per cent, India Inc looks cautiously optimistic,” He-witt’s Performance and Rewards Consulting pract-ice leader in India Sandeep Chaudhary said.
The survey revealed that 16 per cent of companies surveyed have a salary freeze and they were mainly organisations in the finan-cial services, IT and ITeS sector.
Moreover, only 6 per cent of the firms have cut salaries and just 5 per cent were considering layoffs for FY10.
“During these unprece-dented times when firms across the world conside-red options such as mass layoffs and salary cuts, India Inc also considered the same measures, but with maturity,” Chaudhary added.
“It reflects the response of a growth economy man-aging a short to medium term slowdown, while keeping an eye on long term growth,” he added.
Interestingly, about 30 per cent of the organisa-tions have deferred their salary revision cycle. They have been deferred from April to July or October, the survey stated.
The survey said the firms were laying stringent focus on performance and productivity with as much as 69.2 per cent employees getting a rating of ‘met expectations’ or ‘below’.
“There is a stricter identification of top and bottom performers. In almost every sector, emplo-yees who were rated as ‘far exceeds expectations’, ha-ve received a salary incre-ase almost two times higher than that provided to employees who only ‘met expectations’,” the survey added.
The general trend which has emerged is that several firms are considering a salary increase only for their top performers for the year 2009-2010.
The survey was conduct-ed across 137 firms (foreign-owned, locally-owned, and joint-venture private sector) and 9 primary industries during the period of May-June 2009.
“The survey was carried out at this time as most companies set their apprai-sal and salary related polic-ies at the start of the financial year in April,” Chaudhary added.
The survey pointed out that 61.9 per cent of respondents have reported that their salary increase budget is different from the previous forecast and all employee levels have been impacted by the reduction in salary increase budgets.
According to a mid-year survey on Performance & Reward Trends by Hewitt Associates, companies acr-oss industries are strongly differentiating rewards on the basis of performance but majority of them are not considering any layoffs or severe salary cuts in the present financial year.
“With only five per cent of the organisations consi-dering layoffs, minimal salary reduction at 6 per cent and salary freeze at 16 per cent, India Inc looks cautiously optimistic,” He-witt’s Performance and Rewards Consulting pract-ice leader in India Sandeep Chaudhary said.
The survey revealed that 16 per cent of companies surveyed have a salary freeze and they were mainly organisations in the finan-cial services, IT and ITeS sector.
Moreover, only 6 per cent of the firms have cut salaries and just 5 per cent were considering layoffs for FY10.
“During these unprece-dented times when firms across the world conside-red options such as mass layoffs and salary cuts, India Inc also considered the same measures, but with maturity,” Chaudhary added.
“It reflects the response of a growth economy man-aging a short to medium term slowdown, while keeping an eye on long term growth,” he added.
Interestingly, about 30 per cent of the organisa-tions have deferred their salary revision cycle. They have been deferred from April to July or October, the survey stated.
The survey said the firms were laying stringent focus on performance and productivity with as much as 69.2 per cent employees getting a rating of ‘met expectations’ or ‘below’.
“There is a stricter identification of top and bottom performers. In almost every sector, emplo-yees who were rated as ‘far exceeds expectations’, ha-ve received a salary incre-ase almost two times higher than that provided to employees who only ‘met expectations’,” the survey added.
The general trend which has emerged is that several firms are considering a salary increase only for their top performers for the year 2009-2010.
The survey was conduct-ed across 137 firms (foreign-owned, locally-owned, and joint-venture private sector) and 9 primary industries during the period of May-June 2009.
“The survey was carried out at this time as most companies set their apprai-sal and salary related polic-ies at the start of the financial year in April,” Chaudhary added.
The survey pointed out that 61.9 per cent of respondents have reported that their salary increase budget is different from the previous forecast and all employee levels have been impacted by the reduction in salary increase budgets.
Tuesday, July 7, 2009
Cost cutting
BT offers off time for pay cut
Telecom company BT Group PLC is offering staff a year off work in return for a 75 per cent cut in that year's pay.
BT is one of Britain's biggest companies, with more than 100,000 employees. It is trying to cut costs after posting a net loss of almost 1 billion pounds ($1.6 billion) for the first three months of 2009.
The company said that staff who take up the offer will get the remaining quarter of their salary as an upfront payment. Employees are also being offered incentives to work part-time.
BT already has said it expects to cut 15,000 jobs in the next year. Many companies are seeking to trim payroll costs. British Airways asked employees to take unpaid leave or work for a month without pay. It says 7,000 of its 40,000 staff agreed.
BT is one of Britain's biggest companies, with more than 100,000 employees. It is trying to cut costs after posting a net loss of almost 1 billion pounds ($1.6 billion) for the first three months of 2009.
The company said that staff who take up the offer will get the remaining quarter of their salary as an upfront payment. Employees are also being offered incentives to work part-time.
BT already has said it expects to cut 15,000 jobs in the next year. Many companies are seeking to trim payroll costs. British Airways asked employees to take unpaid leave or work for a month without pay. It says 7,000 of its 40,000 staff agreed.
Saturday, July 4, 2009
Cost cutting, CTS, Infosys, TCS, Wipro
IT firms gear up to strong background checks
IT firms gear up to verify their employees’ backgrounds more strictly in order to check fraudulent claims of tenure, designations and degrees.
Verifying backgrounds of employees, which major IT companies like Tata Consultancy Services (TCS), Infosys Technologies, Wipro and Cognizant have been doing for 5-6 years, is becoming more stringent after the terror attacks throughout the country.
It’s being done with good reason. Pre-screening players allege that ‘fake degrees’ can be obtained and verified in India with ease. Consider this. Of all the discrepancies recorded in the first quarter (Q1) of January 2009, about 71 per cent are related to past employment data, according to a pre-screening firm, First Advantage. About 20 per cent are related to past educational data; and 4 out of 5 educational discrepancies relate to cases of fake documentation.
Incorrect tenure (35 per cent), inflated designations (11 per cent), false employment information (39 per cent), inflated compensation (3 per cent), suppression of negative supervisor/HR feedback (11 per cent), and criminal discrepancies (North-25.8 per cent, South-22.6 per cent, West-38.7 pre cent & East-12.9 per cent) comprise the ailments that plague companies, according to Ashish Dehade, managing director (West Asia), First Advantage.
IT firms agree with these statistics. Wipro, for instance, hires close to 10,000 employees every year. “We have been using multiple methods over the past few years to verify the claims of employees. Fraudulent certificates abound. We work with both an in-house team and have an assessment by the external HR agencies. Final interviews are always conducted in person (earlier telephonic and video conferencing was permitted),” explains Arvind J, head — Talent Acquisition, Wipro Infotech.
Wipro has blacklisted close to 300 companies which issue false experience certificates (employees pay to get such endorsements). Moreover, it has “placed under a scanner around 150 colleges and institutes which are known to be of dubious credentials.” It has to take such stern measures since the company has at least 600,000 active resumes, and validates around 1,000-1,500 resumes every week.
Wipro’s not a lone case. Most of the other IT majors perform a similar exercise. Moreover, while they may compete for IT services deals and poach each other’s employees too, they collaborate (but do not go on record) when it comes to sharing the databases of fraudulent companies and errant colleges and institutes.
TCS, for instance, hires nearly 30,000 employees annually. “Background verification is a very good way of identifying the genuiness of candidates,” avers K Ganeshan, VP (HR), TCS. The IT major also has an accreditation methodology and has “accredited around 1,300 campuses and close to 315 colleges.” The plan appears to be working for the company. Last year, for instance, of the 6,000 lateral (experienced) hires, it detected only around 230 fraudulent cases. “And the number is dwindling with every passing year due to our strong audit process,” says Ganeshan.
Mohandas Pai, director (Human Resources), Infosys Technologies, concurs with this view. The company implemented this “vigorous process nearly six years back, and employees are wary of our strategies. The crafty ones stay away since they know they will be identified and penalised,” cautions Pai.
Nasdaq-listed Cognizant, too, has a stringent due diligence processes and practices in place for whetting prospective candidates at different levels. “We avail of the services of third-party firms to carry out thorough background checks of prospective as well as inducted employees. This involves processes ranging from cross-checking with the HR function at former employers, to digging out pertinent information from respective colleges, and has been quite effective,” says Bhaskar Das, vice- president, Human Resources, Cognizant. The HR personnel initiate a reference check well before an employee joins the organisation. “In most cases, this process is completed prior to the employee joining us,” adds Das.
Incidentally, Cognizant has over 30,000 of its India-based employees registered as part of software body Nasscom’s National Skills Registry (NSR), among the highest in the industry.
Nasscom had set up the NSR in 2005 — a database of details of the IT Professionals (ITPs) — and currently has around 400,000 employees registered with it. However, employers must ensure that checks are done with the employee’s consent. Ensuring that employees are given proper notice is a very important part of positioning your firm to be able to act at a later date should something go awry with employee records, note HR experts.
After registering the details on the NSR site, IT Professionals (ITPs) need to visit Point Of Service (POS) offices appointed by NSDL Database Management Limited (NDML) for submitting their finger-prints (biometric identification), photograph, signature and fee (if not paid through payment gateway).
“How vigorous the background checks should be depends on the sensitivity of the project,” notes Som Mittal, president, Nasscom. He adds that Nasscom is in the process of combining the information contained in the NSR database and the independent databases of IT companies.
But there’s a problem. While the larger companies may have their act in order, smaller IT-BPO companies will have to depend on the NSR database. It’s here where the challenges lie.
Rohit Mahajan, executive director, KPMG Forensic, acknowledges that background verification of employees is just the “first level of assurance to the client.” He adds, though, that there’s a challenge when the verification process is “defined as a commodity. Had it been perceived as a risk management process, it would have been a better value proposition.”
There’s another hurdle to cross. Pre-employment screening players say there is no centralised public access to police records, which makes a comprehensive nationwide search impossible. One has to identify the correct police station of the area of residence to track a person. If a person has resided at different addresses in the same city, one has to request for separate searches. This is a tedious process.
Finally, the IT sector is way ahead when it comes to background verification. If all sectors are taken into consideration, the revelation is scary. Over 98 per cent of all registered Indian firms (across all sectors) do not conduct any background screening. Inquiries related to fraud get restricted to internal audits in most cases. “Even for the 2 per cent that do,” says Kunwar Vikram Singh, chairman, Central Association of Private Security Industry and The Association of Private Detectives and Investigators, “nearly 80 per cent of the information that is verified by third-party investigators is not reliable.”
Source: BusinessStandard.com
Verifying backgrounds of employees, which major IT companies like Tata Consultancy Services (TCS), Infosys Technologies, Wipro and Cognizant have been doing for 5-6 years, is becoming more stringent after the terror attacks throughout the country.
It’s being done with good reason. Pre-screening players allege that ‘fake degrees’ can be obtained and verified in India with ease. Consider this. Of all the discrepancies recorded in the first quarter (Q1) of January 2009, about 71 per cent are related to past employment data, according to a pre-screening firm, First Advantage. About 20 per cent are related to past educational data; and 4 out of 5 educational discrepancies relate to cases of fake documentation.
Incorrect tenure (35 per cent), inflated designations (11 per cent), false employment information (39 per cent), inflated compensation (3 per cent), suppression of negative supervisor/HR feedback (11 per cent), and criminal discrepancies (North-25.8 per cent, South-22.6 per cent, West-38.7 pre cent & East-12.9 per cent) comprise the ailments that plague companies, according to Ashish Dehade, managing director (West Asia), First Advantage.
IT firms agree with these statistics. Wipro, for instance, hires close to 10,000 employees every year. “We have been using multiple methods over the past few years to verify the claims of employees. Fraudulent certificates abound. We work with both an in-house team and have an assessment by the external HR agencies. Final interviews are always conducted in person (earlier telephonic and video conferencing was permitted),” explains Arvind J, head — Talent Acquisition, Wipro Infotech.
Wipro has blacklisted close to 300 companies which issue false experience certificates (employees pay to get such endorsements). Moreover, it has “placed under a scanner around 150 colleges and institutes which are known to be of dubious credentials.” It has to take such stern measures since the company has at least 600,000 active resumes, and validates around 1,000-1,500 resumes every week.
Wipro’s not a lone case. Most of the other IT majors perform a similar exercise. Moreover, while they may compete for IT services deals and poach each other’s employees too, they collaborate (but do not go on record) when it comes to sharing the databases of fraudulent companies and errant colleges and institutes.
TCS, for instance, hires nearly 30,000 employees annually. “Background verification is a very good way of identifying the genuiness of candidates,” avers K Ganeshan, VP (HR), TCS. The IT major also has an accreditation methodology and has “accredited around 1,300 campuses and close to 315 colleges.” The plan appears to be working for the company. Last year, for instance, of the 6,000 lateral (experienced) hires, it detected only around 230 fraudulent cases. “And the number is dwindling with every passing year due to our strong audit process,” says Ganeshan.
Mohandas Pai, director (Human Resources), Infosys Technologies, concurs with this view. The company implemented this “vigorous process nearly six years back, and employees are wary of our strategies. The crafty ones stay away since they know they will be identified and penalised,” cautions Pai.
Nasdaq-listed Cognizant, too, has a stringent due diligence processes and practices in place for whetting prospective candidates at different levels. “We avail of the services of third-party firms to carry out thorough background checks of prospective as well as inducted employees. This involves processes ranging from cross-checking with the HR function at former employers, to digging out pertinent information from respective colleges, and has been quite effective,” says Bhaskar Das, vice- president, Human Resources, Cognizant. The HR personnel initiate a reference check well before an employee joins the organisation. “In most cases, this process is completed prior to the employee joining us,” adds Das.
Incidentally, Cognizant has over 30,000 of its India-based employees registered as part of software body Nasscom’s National Skills Registry (NSR), among the highest in the industry.
Nasscom had set up the NSR in 2005 — a database of details of the IT Professionals (ITPs) — and currently has around 400,000 employees registered with it. However, employers must ensure that checks are done with the employee’s consent. Ensuring that employees are given proper notice is a very important part of positioning your firm to be able to act at a later date should something go awry with employee records, note HR experts.
After registering the details on the NSR site, IT Professionals (ITPs) need to visit Point Of Service (POS) offices appointed by NSDL Database Management Limited (NDML) for submitting their finger-prints (biometric identification), photograph, signature and fee (if not paid through payment gateway).
“How vigorous the background checks should be depends on the sensitivity of the project,” notes Som Mittal, president, Nasscom. He adds that Nasscom is in the process of combining the information contained in the NSR database and the independent databases of IT companies.
But there’s a problem. While the larger companies may have their act in order, smaller IT-BPO companies will have to depend on the NSR database. It’s here where the challenges lie.
Rohit Mahajan, executive director, KPMG Forensic, acknowledges that background verification of employees is just the “first level of assurance to the client.” He adds, though, that there’s a challenge when the verification process is “defined as a commodity. Had it been perceived as a risk management process, it would have been a better value proposition.”
There’s another hurdle to cross. Pre-employment screening players say there is no centralised public access to police records, which makes a comprehensive nationwide search impossible. One has to identify the correct police station of the area of residence to track a person. If a person has resided at different addresses in the same city, one has to request for separate searches. This is a tedious process.
Finally, the IT sector is way ahead when it comes to background verification. If all sectors are taken into consideration, the revelation is scary. Over 98 per cent of all registered Indian firms (across all sectors) do not conduct any background screening. Inquiries related to fraud get restricted to internal audits in most cases. “Even for the 2 per cent that do,” says Kunwar Vikram Singh, chairman, Central Association of Private Security Industry and The Association of Private Detectives and Investigators, “nearly 80 per cent of the information that is verified by third-party investigators is not reliable.”
Source: BusinessStandard.com
Wednesday, July 1, 2009
Cost cutting, Recession
IT biggies take 40% hit in billing rates
The race to woo recession-hit clients across the world is forcing IT biggies to reduce their client billing rates, sometimes as high as 35-40 %, though most are still managing to control any sharp declines in their topline.
In certain projects the billing rates are down to $16 an hour, which, analysts say are the lowest ever rates. And such rates will continue at least till Q1 next year, they add. “We have seen such sustained decreases in pricing in most projects. I expect this to last until the year end at least,” says Siddhartha Pai, Partner and MD, at the India offices of TPI Inc, a global outsourcing advisory firm.
“The last month or so has seen unprecedented cut in billing rates even for existing customers,” said Avinash Vashisth, chairman and CEO, Tholons, an offshore advisory firm.
He said that for large testing services, and of services of similar value, $16-20 is the prevalent rate. This is almost 30-35 % lower than the rates being charged earlier this year and steeper than the 20% cut that British Telecom had demanded from Infosys and Tech Mahindra earlier this year on some old and new projects. Also higher-end projects like SAP have faced pricing cuts of around 25%, which is again more than what it was earlier this year.
Top IT firms are offering such rates in the form of introductory discounts for new clients, and for a year or two for existing clients.”Pricing has been reduced substantially for some clients, including higher end projects, specially for long terms strategic clients or those that have been hit quite badly during the recession,” said a senior executive in Infosys who declined to be named as the company is currently in the silent period. A Wipro spokesperson said the company will not comment on speculation.
Another worrying factor for the IT firms is that despite the rate cuts, there has not been a corresponding rise in the volume of deal flow, in either highervalue or the lower end services, says Pai. “The deal flow is still low,” says Pai. Diptarup Chakraborti, Principal Analyst at Gartner, says that he does not see the situation improving before Q1 or Q2 next year.
“Good old days are not coming this year for sure,” he said. A Gartner study says prices of IT services in outsourcing are anticipated to shrink well up to 2010 due to an uncertain economic climate, IT budget constraints and general market consciousness. These rates are even lesser than what the facilities personnel make per hour in their client’s offices even in eastern European countries, where it varies between $16- $22 per hour, according to Vashisth who has offices in Europe.
“There is cut throat competition now between the top five IT companies to retain and snap up new clients,” he says. The rate cut has been in stages. In November, clients demanded flat rates, by the first quarter of this year they wanted 20% cuts, and now most are demanding 30-35 % cuts for not just new, but also existing contracts.
Research analysts with Merrill Lynch and Co, had said in a research note in December that more companies are re-negotiating .
Source: IndiaTimes.com
In certain projects the billing rates are down to $16 an hour, which, analysts say are the lowest ever rates. And such rates will continue at least till Q1 next year, they add. “We have seen such sustained decreases in pricing in most projects. I expect this to last until the year end at least,” says Siddhartha Pai, Partner and MD, at the India offices of TPI Inc, a global outsourcing advisory firm.
“The last month or so has seen unprecedented cut in billing rates even for existing customers,” said Avinash Vashisth, chairman and CEO, Tholons, an offshore advisory firm.
He said that for large testing services, and of services of similar value, $16-20 is the prevalent rate. This is almost 30-35 % lower than the rates being charged earlier this year and steeper than the 20% cut that British Telecom had demanded from Infosys and Tech Mahindra earlier this year on some old and new projects. Also higher-end projects like SAP have faced pricing cuts of around 25%, which is again more than what it was earlier this year.
Top IT firms are offering such rates in the form of introductory discounts for new clients, and for a year or two for existing clients.”Pricing has been reduced substantially for some clients, including higher end projects, specially for long terms strategic clients or those that have been hit quite badly during the recession,” said a senior executive in Infosys who declined to be named as the company is currently in the silent period. A Wipro spokesperson said the company will not comment on speculation.
Another worrying factor for the IT firms is that despite the rate cuts, there has not been a corresponding rise in the volume of deal flow, in either highervalue or the lower end services, says Pai. “The deal flow is still low,” says Pai. Diptarup Chakraborti, Principal Analyst at Gartner, says that he does not see the situation improving before Q1 or Q2 next year.
“Good old days are not coming this year for sure,” he said. A Gartner study says prices of IT services in outsourcing are anticipated to shrink well up to 2010 due to an uncertain economic climate, IT budget constraints and general market consciousness. These rates are even lesser than what the facilities personnel make per hour in their client’s offices even in eastern European countries, where it varies between $16- $22 per hour, according to Vashisth who has offices in Europe.
“There is cut throat competition now between the top five IT companies to retain and snap up new clients,” he says. The rate cut has been in stages. In November, clients demanded flat rates, by the first quarter of this year they wanted 20% cuts, and now most are demanding 30-35 % cuts for not just new, but also existing contracts.
Research analysts with Merrill Lynch and Co, had said in a research note in December that more companies are re-negotiating .
Source: IndiaTimes.com
Cost cutting, TCS
TCS says more cost-cutting ahead
Source: ndtv.com
Speaking at the company's annual shareholders’ meet, Chairman Ratan Tata said its growth may be hit unless economic situation improves and it will take further cost-cutting measures in this fiscal. Tata Consultancy Services expects lower or no growth in the foreseeable future as the IT industry battles the difficult global conditions, he said.
To adjust to the changing scenario, he said, TCS would look offshoring more jobs as part of revamping its business structure.
Forecasting low growth for IT sector, Ratan Tata pegged FY10 capital expenditure of TCS at Rs 1,300 crore. On the passport project, he said that the pilot version would be ready by October. Well, Tata is walking a tight rope as he finally admits to shareholders that next few quarters wouldn’t be good.
The slowdown in growth will force TCS, India's largest tech firm, to fall short of its target of achieving $10 billion in revenues by 2010. Ratan Tata, chairman of Tata Sons, said, "Expenditure on it is expected to be down due to slowdown."
Well, Ratan Tata not only came up close and frank with his investors, but also signaled that TCS was now ready for a complete recast for the company's business model.
This candid talk comes two months ahead of the retirement of the current CEO, S Ramadorai, leaving the new boss N Chandrashekharan, the task of radical changes. Meanwhile, Tata has set the tone not just for TCS but also for the industry. His tone was extremely bearish. Meanwhile, for TCS of course, there is a change of guard at the top. Both the company and the shareholders hope that younger hands will make a difference to their fortunes as well.
Speaking at the company's annual shareholders’ meet, Chairman Ratan Tata said its growth may be hit unless economic situation improves and it will take further cost-cutting measures in this fiscal. Tata Consultancy Services expects lower or no growth in the foreseeable future as the IT industry battles the difficult global conditions, he said.
To adjust to the changing scenario, he said, TCS would look offshoring more jobs as part of revamping its business structure.
Forecasting low growth for IT sector, Ratan Tata pegged FY10 capital expenditure of TCS at Rs 1,300 crore. On the passport project, he said that the pilot version would be ready by October. Well, Tata is walking a tight rope as he finally admits to shareholders that next few quarters wouldn’t be good.
The slowdown in growth will force TCS, India's largest tech firm, to fall short of its target of achieving $10 billion in revenues by 2010. Ratan Tata, chairman of Tata Sons, said, "Expenditure on it is expected to be down due to slowdown."
Well, Ratan Tata not only came up close and frank with his investors, but also signaled that TCS was now ready for a complete recast for the company's business model.
This candid talk comes two months ahead of the retirement of the current CEO, S Ramadorai, leaving the new boss N Chandrashekharan, the task of radical changes. Meanwhile, Tata has set the tone not just for TCS but also for the industry. His tone was extremely bearish. Meanwhile, for TCS of course, there is a change of guard at the top. Both the company and the shareholders hope that younger hands will make a difference to their fortunes as well.
Cost cutting
Adobe Shuts Down July 4th Week to Ride out Recession
Adobe Systems has shut down its North American offices for a week for the second time this year as part of cost-cutting measures, forcing employees to take paid time off during the days the company is closed.
An automated statement on Adobe's phone system confirmed that the company will be closed from Monday until Friday, July 3, and will resume normal business hours on Monday, July 6, after the nationally celebrated July 4 holiday in the U.S.
Adobe also shut down for a week earlier this year to help the company ride out the recession, and it plans to shut down for another week later this year in addition to its normal weekly closure between Christmas and New Year's Day in December, the company confirmed in a press statement.
"In each case, employees are asked to take the time as paid time off -- the net effect of which lowers the company's operating expense," Adobe said in a press statement.
Like competitors, Adobe has not been immune to the recession and has enacted a series of cost-cutting measures to ride it out. The company let go about 8 percent of its workforce in December and has frozen existing employee salaries as part of these efforts.
Some of Adobe's woes can be attributed to lackluster adoption of the latest version of its Creative Suite products, which are responsible for the bulk of its revenue. Sales in Adobe's second quarter, ended May 29, fell 21 percent, and the company posted its narrowest profit margin in more than three years.
Despite hitting tough times, the company has continued to invest steadily in updating its software for creating rich Internet applications (RIAs) and to make its Flash platform ubiquitous across the Web as it faces increased pressure from competitors like Microsoft.
The company also in the past month made its Acrobat.com worker collaboration and productivity services available to customers via new subscriptions, as well as released a preview of the next version of FlashBuilder, its main toolset for helping developers build RIAs. Adobe also rebranded the toolset to highlight the Flash brand; it was formerly called FlexBuilder.
An automated statement on Adobe's phone system confirmed that the company will be closed from Monday until Friday, July 3, and will resume normal business hours on Monday, July 6, after the nationally celebrated July 4 holiday in the U.S.
Adobe also shut down for a week earlier this year to help the company ride out the recession, and it plans to shut down for another week later this year in addition to its normal weekly closure between Christmas and New Year's Day in December, the company confirmed in a press statement.
"In each case, employees are asked to take the time as paid time off -- the net effect of which lowers the company's operating expense," Adobe said in a press statement.
Like competitors, Adobe has not been immune to the recession and has enacted a series of cost-cutting measures to ride it out. The company let go about 8 percent of its workforce in December and has frozen existing employee salaries as part of these efforts.
Some of Adobe's woes can be attributed to lackluster adoption of the latest version of its Creative Suite products, which are responsible for the bulk of its revenue. Sales in Adobe's second quarter, ended May 29, fell 21 percent, and the company posted its narrowest profit margin in more than three years.
Despite hitting tough times, the company has continued to invest steadily in updating its software for creating rich Internet applications (RIAs) and to make its Flash platform ubiquitous across the Web as it faces increased pressure from competitors like Microsoft.
The company also in the past month made its Acrobat.com worker collaboration and productivity services available to customers via new subscriptions, as well as released a preview of the next version of FlashBuilder, its main toolset for helping developers build RIAs. Adobe also rebranded the toolset to highlight the Flash brand; it was formerly called FlexBuilder.
Tuesday, June 30, 2009
Cost cutting
Air India agrees to pay salaries to some employees on July 3
The standoff between Air India and its employee unions over delayed salaries is now over. The airlines would pay salaries of nearly 24,000 of its 32,000 employees on July 3. Air India had earlier said that the salaries of employees would be paid on July 15.
Thousands Air India employees, had staged a sit-in on Friday at their respective stations across the nation to protest against the airline management's decision to defer payment of their salaries by a fortnight. Hundreds of AI employees, associated with the three unions—ACEU, Aviation Industry Employees Guild (AIEG) and Indian Aircraft Technician's Association (IATA)—protested near the office of the airline's Executive Director's (Northern Region) at the IGI airport in New Delhi.
About 24,000 AI employees, associated with the three unions, had earlier decided to wear black badges from June 22 to 25 as mark of protest. They had said if the management fails to issue their salaries on June 30, they would boycott their duties under the "no pay no work" policy, which is likely to affect the operations of the national carrier.
On Thursday, during their meeting with Air India Chairman-cum-Managing Director Arvind Jadhav, the unions had refused any renegotiation of wage agreement with the management after it proposed a wage cut to employees to tide over the financial crunch faced by the airlines.
The unions also demanded a re-look by the management into the company's new aircraft acquisition policy as it has substantially contributed to the air carrier's present financial difficulties.
Thousands Air India employees, had staged a sit-in on Friday at their respective stations across the nation to protest against the airline management's decision to defer payment of their salaries by a fortnight. Hundreds of AI employees, associated with the three unions—ACEU, Aviation Industry Employees Guild (AIEG) and Indian Aircraft Technician's Association (IATA)—protested near the office of the airline's Executive Director's (Northern Region) at the IGI airport in New Delhi.
About 24,000 AI employees, associated with the three unions, had earlier decided to wear black badges from June 22 to 25 as mark of protest. They had said if the management fails to issue their salaries on June 30, they would boycott their duties under the "no pay no work" policy, which is likely to affect the operations of the national carrier.
On Thursday, during their meeting with Air India Chairman-cum-Managing Director Arvind Jadhav, the unions had refused any renegotiation of wage agreement with the management after it proposed a wage cut to employees to tide over the financial crunch faced by the airlines.
The unions also demanded a re-look by the management into the company's new aircraft acquisition policy as it has substantially contributed to the air carrier's present financial difficulties.
Monday, June 29, 2009
Cost cutting, Wipro
Wipro to slash variable pay by half
Employees who are on the bench for at least 60 days in a quarter to be affected.
To cut costs further, Wipro Technologies, India’s third largest information technology services provider, is understood to have effected a 50 per cent cut in the variable pay of a certain band of employees who are not billable (on the bench) for at least 60 days in a quarter.
Last year, the company had cut the variable pay of employees who were not billable for at least 75 days in a quarter. The new policy was made effective from the first quarter of fiscal year 2010.
The variable pay policy in Wipro, which is known as the Quarterly Performance Linked Compensation (QPLC), is decided every year and given to the employees on a quarterly basis. Wipro decides the QPLC of employees based on their level and seniority in the organisation. The company has decided to give variable pay to a certain band of employees (e.g. project managers) only when their respective business units achieve 80 per cent of the business targets set for the quarter.
Company sources say variable components comprise around 10 per cent of most Wipro employees’ total cost to the company (CTC). So, the overall compensation of the employees who are not billable for at least 60 days in a quarter will be impacted by around 5 per cent.
Wipro’s HR Head Pratik Kumar said, “We revisit our variable plan every year. This year, fundamentally we have not changed anything.” He added that “it (the 60-day number) is too specific a number to comment on.” He, however, added that the individual billability-linked system has been there in the company for the past two-three years. “This is not something we have introduced recently.”
Wipro had 97,810 employees as of March 31, which includes 74,986 working with the company’s IT services business. Of these, close to 8,000 are on the bench. However, not all will be affected, since in the case of a certain level of employees — who are primarily into sales and support roles — the QPLC has been linked to the performance of the overall (IT) business of the company. For employees belonging to certain other bands, it has been linked to the profitability of their respective business units, as well as the company’s overall business performance.
The QPLC of the third category, which comprises primarily software engineers and constitutes the largest chunk of the overall employees, is linked to an individual’s billability factor and the performance of the company. The individual billability factor and the performance of the company is being given equal weightage while deciding a variable pay of the employees in a particular quarter, for this third category of employees.
Courtesy: BusinessStandard
To cut costs further, Wipro Technologies, India’s third largest information technology services provider, is understood to have effected a 50 per cent cut in the variable pay of a certain band of employees who are not billable (on the bench) for at least 60 days in a quarter.
Last year, the company had cut the variable pay of employees who were not billable for at least 75 days in a quarter. The new policy was made effective from the first quarter of fiscal year 2010.
The variable pay policy in Wipro, which is known as the Quarterly Performance Linked Compensation (QPLC), is decided every year and given to the employees on a quarterly basis. Wipro decides the QPLC of employees based on their level and seniority in the organisation. The company has decided to give variable pay to a certain band of employees (e.g. project managers) only when their respective business units achieve 80 per cent of the business targets set for the quarter.
Company sources say variable components comprise around 10 per cent of most Wipro employees’ total cost to the company (CTC). So, the overall compensation of the employees who are not billable for at least 60 days in a quarter will be impacted by around 5 per cent.
Wipro’s HR Head Pratik Kumar said, “We revisit our variable plan every year. This year, fundamentally we have not changed anything.” He added that “it (the 60-day number) is too specific a number to comment on.” He, however, added that the individual billability-linked system has been there in the company for the past two-three years. “This is not something we have introduced recently.”
Wipro had 97,810 employees as of March 31, which includes 74,986 working with the company’s IT services business. Of these, close to 8,000 are on the bench. However, not all will be affected, since in the case of a certain level of employees — who are primarily into sales and support roles — the QPLC has been linked to the performance of the overall (IT) business of the company. For employees belonging to certain other bands, it has been linked to the profitability of their respective business units, as well as the company’s overall business performance.
The QPLC of the third category, which comprises primarily software engineers and constitutes the largest chunk of the overall employees, is linked to an individual’s billability factor and the performance of the company. The individual billability factor and the performance of the company is being given equal weightage while deciding a variable pay of the employees in a particular quarter, for this third category of employees.
Courtesy: BusinessStandard
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