Amid a challenging business environment, Infosys, India’s bellwether IT company, could reportedly axe hundreds of mid and senior-level employees from its workforce in India, even as it plans to hire 10,000 Americans in the next two years and open four centres in the US to counter the new tougher visa norms. “Our performance management process provides for a bi- annual assessment of performance. A continued low feedback on performance could lead to certain performance actions, including separation of an individual and this is done only after feedback,” Infosys said in a statement. The development comes at a time when its peers Wipro and Cognizant are taking similar measures to control costs.
The incident is emblematic of the quagmire of slowing growth and environmental difficulties that lay ahead of the Indian information technology companies. On one hand, reducing client spends and pricing pressures are squeezing margins of the companies. On the other hand, the increasingly tougher visa regimes, with proposed restrictions on work visa norms by countries like the US, UK, Singapore and Australia, are making it more difficult for the companies to carry on their operations in these countries in a cost-effective manner.
These multiple challenges being faced by India’s information technology companies have begun taking a toll on the employment prospects, with one of the largest organised employment sector cutting back on hiring or even undertaking retrenchment. To cope up with the rapidly evolving landscape, Indian IT companies are investing heavily in automating processes in their traditional businesses such as BPO, application management and infrastructure management to improve operating margins. This is leaving these companies with surplus manpower, as an increase in automation allows for fewer people – to be deployed only for advanced roles, as tedious tasks can be put on automation to improve efficiencies.
Last week, Cognizant, the US-based IT major, had rolled out a voluntary separation programme for directors, associate vice-presidents and senior vice-presidents, offering them six to nine months of salary. A Cognizant spokesperson had said it represents a very small percentage of the total workforce of the company. Cognizant did not disclose the number of employees who had been offered this voluntary separation option but had said it aims to wind up the process by the end of the second quarter.
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“We continue to recruit and hire across all of our practices and are expanding facilities globally, ensuring that we have the right expertise to help our clients. As part of these initiatives, we are offering a voluntary separation incentive to some eligible leaders, representing a very small percentage of our total workforce,” the spokesperson had said.
“This voluntary initiative is being communicated to management-level associates – from director-level to senior vice president – and eligibility is at the discretion of Cognizant leadership,” the spokesperson added. The spokesperson did not disclose any further details regarding the compensation but assured it was fair and gave a positive experience for those who decided to leave the company.
Meanwhile, Cognizant employees fearing job loss have started assessing their legal options and have reportedly initiated conciliation proceedings with the state labour department in Chennai and plan to do so in Hyderabad, Bangalore and Kolkata as well, on the grounds that the company is adopting unfair methods to let go of some of its workforce.
Last month Wipro, India’s third-largest information technology service provider, had reportedly sacked 300-600 employees to “align its workforce with business objectives, strategic priorities of the organisation and requirement of its clients”.