1. Tech Mahindra follows peers, to lay off 1500 staff as glut in IT industry continues

Tech Mahindra follows peers, to lay off 1500 staff as glut in IT industry continues

IT majors are in the process of downsizing as protectionist policies in the US and new technologies shake up the $150-billion Indian IT sector. A majority of Tech Mahindra employees are based in India.

By: | Published: May 11, 2017 11:49 AM
India’s fifth-largest IT services firm Tech Mahindra is reportedly planning to lay off close to 1,500 employees across all levels, i.e. nearly 1.2% of its workforce.

India’s fifth-largest IT services firm Tech Mahindra is reportedly planning to lay off close to 1,500 employees across all levels, i.e. nearly 1.2% of its workforce, following in the footsteps of its bigger rivals such as Infosys, Wipro and Cognizant. IT majors are in the process of downsizing as protectionist policies in the US and new technologies shake up the $150-billion Indian IT sector.

Tech Mahindra had close to 117,095 employees across 90 countries as of 31 December 2016. A majority of these employees are based in India. It was not immediately clear which job levels would be impacted as a result of these layoffs.

The company has said that these redundancies are part of the normal appraisal cycle. “We have a process of weeding out bottom performers every year and this year is no different,” a Tech Mahindra spokesperson said in a statement.

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Earlier this week, media reported that 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.

Last week, Cognizant, an IT major based in the US, 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 that the number of employees to whom this voluntary separation programme is being offered represents a very small percentage of the total workforce of the company. Cognizant did not disclose the number of employees who have been offered this voluntary separation option but had said that it aims to wind up this process by the end of the second quarter. 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.

“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.

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”

These incidents showcase the tight spot that Indian information technology companies find themselves in. On one hand, reducing client spends and pricing pressures are squeezing these companies’ margins and bottom lines, while on the other hand, due to increasingly tougher visa regimes by countries like the US, UK, Singapore and Australia, which propose drastic restrictions on work visas, these companies are finding it even more difficult to carry on with their operations in these countries in a cost-effective manner.

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