Loss of jobs – meltdown

Many feel that quite a few Indian IT companies may not give their hiring guidance due to the uncertainty in IT spends from US companies, which are facing the brunt of the financial crisis. Consequently, many smaller Indian IT firms are expected to hire in reduced numbers. Further, they are cutting their bench strength to improve employee utilisation and productivity.
For instance, Bangalore-based IT outsourcing services provider MphasiS, an EDS company, is reducing hiring plans by almost 50 per cent. At the beginning of this financial year, the company had announced that it would recruit 8,000 people. That figure is down to 4,000. The company’s Chief executive attributes the slash to higher employee utilisation. Overall, hiring has slowed down in the industry. IT companies now tend to drive more towards productivity and operational improvements rather than hire more numbers. Over the last eight months, they said that they have driven up our utilisation rate 10 percentage points. That is why the need for fewer people.
Campus recruitment by IT companies is expected to fall below 40 per cent from around 60 per cent. In the current financial year, Wipro has so far issued 6,000 offer letters to freshers under its campus recruitment program. Last year, the number was 12,000. People are becoming much more conservative in terms of hiring from campuses next year. It may be possible that companies do not make any commitments upfront from next year.
Experts say this was bound to happen after a period of excesses. Companies were earlier recruiting anybody with a pair of hands just to stock up in case the growth story continued. Suddenly, they are feeling the heat.
Many recruitment consultants say that one out of every 20 employees in the sectors of IT and banking and financial services risks losing her job because of the meltdown. Layoffs are still a sensitive issue in India and no company is willing to put any number to the people being asked to ship out, but most companies say in private that the churn is on. No one wants to be as foolish as Jet, but people are being shipped out quietly — of course with adequate out-placement safeguards.
Others say the impact of what is happening in London will complicate matters further and Indian employees are bound to feel the ripples. For example, the layoff figure in the UK’s financial district is expected to touch 60,000 by the end of next year, reducing employment in the industry to the lowest in more than a decade as the credit crisis worsens.
The legal, professional services, insurance, fund management, securities and equities industries are likely to follow by cutting headcount by up to 20 per cent. Banks worldwide are shelving deals and cutting employees as the turmoil in credit markets spreads. About half of London’s 15,000 corporate finance jobs will disappear by the end of next year as mergers and acquisitions slow down.
Companies have announced $1.2 trillion worth of takeovers in Europe this year, a 25 per cent drop on the same period in 2007, according to data by Bloomberg. Almost 46 per cent of derivatives-related jobs in London may also go as demand for more complex products wanes.
Banks and investment firms have eliminated more than 134,000 jobs globally since the beginning of the credit crisis last year. That is horrible news for Indian companies that depend on Europe’s BFSI segment, which has added more jobs than all the other service sectors combined since 2004.
Though there is relative stability at the top, Indian companies admit in private that large-scale layoffs are taking place at the middle level, too, but quietly. There is a sense of quiet anxiety that can be seen in industry as no one knows how long the uncertainty will last. But progressive companies are planning to use the slowdown to take a hard look at their business strategy and tailor their human resource plans accordingly.