The $100-billion Indian information technology industry has seen a drop in business volume and there may even be some missed growth targets this fiscal, but the country’s top-tier IT firms are still wary of any kind of mass retrenchment. Recruitment consultants say organisations are now more discreet in letting go of their non-performing staff in bulk, preferring to restrict pink slips as the negative publicity can linger for years.
Having been caught off-guard by the severe economic downturn in 2008 and 2009, many Indian IT companies ended up with large bench strengths and resorted to layoffs with no back-up strategy. But this time, organisations are engaging much more in reskilling many of their employees to be in line with market requirements.
“Bulk layoff is a rarity and the last resort for any company. Currently layoffs are definitely happening across companies, but more selective than last year. Companies do not admit when they let people go. They try to keep it under wraps,” says Ronesh Puri, managing director, Executive Access, a head-hunting firm.
Sangeeta Lala, senior vice-president, sourcing, TeamLease Services, points out that there is no mass layoff happening yet. “We have not seen IT companies taking steps to lay off employees in large numbers. However, it is a difficult time as the visibility on future business is very low. During tough times companies become much stricter and far less patient. Difficult decisions are taken sooner. If earlier a quarter was allotted to employees who were not performing, now it is just a month,” she says.
The top four Indian IT firms — Tata Consultancy Services, Infosys, Wipro and HCL Technologies — together account for a combined workforce of close to 600,000. With business appearing thin over the last one year, the IT services sector has seen an increase in the number of non-billable employees warming their chairs.
People on the bench, who remain unproductive, are a pointer to the volume of work coming into a company.
During the quarter ended September, the average utilisation level of the leading players in the sector stood at around75%, with the rest largely being on the bench.