IT headhunters express shock

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New Delhi: be one of several scenarios and each would have a different impact on employees. In a take over situation the company may take some dire steps to make its balance sheet look better and therefore they would reduce operational cost. This will help the company look better than how the stock is currently doing. In this scenario the company may consider reducing its head count to show less operational cost. It is commonly known that 60% of cost in IT/ ITeS firms is in fact talent related. Another hypothetical situation wherein employees may be impacted is if some large clients cancel their projects with Satyam which may necessitate downsizing”.

Amitabh Sharma who leads the technology and communication practice for Egon Zehnder International in India says of the debacle, “Though junior and mid management employees need not be concerned about the events at Satyam, there is bound to be some taint associated with senior management”. Sharma furtheradds, “This is definitely a watershed incident and highlights the urgency for strong corporate governance and for ethical, truly independent non executive directors on the board”.

In the opinion of E Balaji CEO Ma Foi Management Consultants, “The institutional investors who have a stake in the company will be battling to see it emerge with as few bruises as possible. Raju himself was reportedly holding 9% stake in the company when the debacle was first brought to light but later because of margin calls his stake fell to 4% or 3%. 94% to 95% of the share still stays with institutions and share holders. At present Aberdeen is the single largest share holder holding in excess of 5% stake in the company. Templeton, a globally reputed financial institution is another large stake holder in the company.

Speaking on the broader outlook within the IT and ITeS sector Sharma says, “Technology companies will continue to grow though not as rapidly. We are noticing a trend with captive IT companies such as British Airways’ or Deutsche Bank’s are continuing to expand in India because of cost pressures overseas and if they have a critical mass it makes good business sense for the company. However third party companies seem to have a reduced growth wherein the number of deals seems to have reduced but the size of deals seem larger in the $100 to 300 million range.”