Recruitment in downturn

Recruiting firms are being told by uninterested clients to freeze hiring. Layoffs are no longer taboo. It’s time to re-work HR strategies.
Till just a few months back, department store chain Shopper’s Stop was busy chasing headhunters to find candidates who were “willing” to join. The tables have been turned; it’s the headhunters’ turn to do the chasing while companies play hard to get.
It sums up the impact of the global financial crisis on the Indian employment scenario. Shopper’s Stop, for example, has decided to be very selective in filling up new vacancies and will recruit only when new stores come up.
The slowdown’s impact has not been felt as yet as consumer demand is still rising 10 per cent year-on-year. But things could get a lot worse in the next 12 months if companies become tight-fisted on increments next year. If the salaried individual feels the pinch that is the time when retailers will face the real squeeze.
Future Group chairman agrees that their company, which owns large retail chains like Panta¬loon and Big Bazaar, has cut people cost by 1 per cent by linking salaries with performance, and is going “really slow” on recrui¬t¬ments. Human capability is infinite and multi-tasking is the order of the day.
The slowdown heat is not scalding retail companies alone. At least three top recruiting firms say they have received frantic calls from clients asking them to stop hiring at least for the next couple of quarters.
Enterprise software company SAP, according to sources, has sent an email to its staffers saying “all engagement with external recruiters must cease immediately”. There is a freeze on headcount and hiring, and all existing job vacancies will be cancelled. This includes temporary workers, interns, and students. Others are not far behind in freezing recruitments — especially at the entry level.
The worst fallout of this was seen recently at India’s premier engineering colleges. Several multinational companies withdrew job offers they had given to students of Indian Institutes of Technology at Bombay, Kharagpur and Delhi — a far cry from the days when students at IITs and Indian Institutes of Management interviewed companies to figure out if they were in a position to do justice to the students’ ability.
Just a couple of years back, McKinsey, the consultancy firm, estimated that India’s factories would need 73 million workers by 2015, which is 50 per cent more than today’s. And believe it or not India’s airlines were projected to add 440 new planes by 2010 to their fleets, which meant 3,200 additional jobs for pilots alone, and many times that for cabin crew, ground staff and airport handling personnel. About 40,000 vacancies were expected in the next three to four years just for cabin crew jobs.
Today, Jet Airways is still reeling under its experiment with layoffs. It first sacked 800 employees and announced that 1,100 more will be fired, but retracted the pink slips within 24 hours after a public and political outcry. Soon after the dust subsided came the reports that Kingfisher Airlines had slashed the salaries of its trainee co-pilots by 90 per cent.
In a sense, Jet’s decision was unavoidable. Indian aviation, a $6 billion industry, is expected to lose $2 billion in 2008-09 due to record fuel prices. The losses arising out of the global financial crisis, and the traffic downturn caused by the crisis, make matters worse. Jet has been watching the situation for some time in the hope of a reversal of fortunes.
India’s fourth largest information technology company, Satyam Computer Services, has already put some of its employees under what it calls a performance improvement plan. As part of their appraisal process, they could identify around 5 per cent of their associates under the performance improvement category and put them through a structured program. Now altogether after the scam at Aatyam computers the fate of about 40,000 employees is unknown. It is also possible that this is a ready made talent available for the competitors. Others such as Tata Consultancy Services (TCS), Dell, Yahoo! and EDS (now a part of Hewlett Packard) have done similar exercises.
Wipro Technologies has put 4-5 per cent of its workforce under the scanner for “non-performance”. As the appraisal cycle gets over, a multi-layer review happens. Following that, people who have fallen in the lower quadrants of performance are put on watch. Some are asked to pull up and others are asked to move on.