Thanks to the ongoing market slowdown, salary freezes, recruitment bans and allowance cuts have become the order of the day across the real estate and infrastructure sector. To tackle this, HR teams in these companies are working overtime to come out with effective cost-control measures.
The companies, working on various cost-cutting initiatives since September 2008 are leaving no stone unturned. This exercise has become imperative especially in the backdrop of the drop in demand for real estate projects over the past couple of months. Also, the not-so-sound liquidity position in the market is forcing most of the real estate biggies to either go slow on the projects already announced or to review their plans. The idea is not to lock up funds in projects that seem unviable in the present day scenario. On the other hand, infrastructure players also do not seem upbeat about the contracts they have bagged, especially larger ones, as achieving financial closure for the projects seem gargantuan tasks.
V Pardhasaradhy, head (HR) Indu Projects Ltd, says the company stopped recruitments since September 2008 and is not filling up vacancies created by attrition. The company is adopting various multitasking concepts among employees. ?We have also decided not to give increments and go for a ?salary freeze? during the current year appraisal, with effect from April 2009. The HR officials have had several rounds of meetings with employees to make them to understand the effect of recession. Employees are fine with a salary freeze and cuts in allowances. They are only worried about the security of their job. Indu has not downsized its staff strength?, he said.
Pardhasaradhy also added the company has reviewed and renegotiated all its outsourcing contracts. ?We had earlier outsourced payroll and salary functions to an outside agency. Now, the in-house HR team has taken up the responsibility and this has resulted in a saving of Rs 60 lakh per annum. The company has also cut petrol and conveyance allowances of executives. Besides, efforts are being made to reduce other costs like electricity, refreshment for employees and other administration expenses. We will continue to work towards this goal even in the coming months?, he explained.
G Venkatesh Babu, MD Lanco Infratech, also accepted that several measures are being adopted to bring down costs. ?Earlier, we thought of enhancing the team that is handling real estate projects. But now, since the sector is going slow, we have decided not to go ahead with the plan. Also, the company is looking at reducing costs by controlling employee benefits. The bonuses and increments given to our employees this year will not be as substantial as those given last year. However, in the case of the infrastructure vertical, especially the power sector, we will not have any restriction on recruitment, as there is a huge demand-supply gap in the sector?, he said.
According to DS Rao, senior vice president IJM (India), the company has also been implementing several measures to control costs. ?The company has restricted air travel by senior executives. There is also a conscious cut on the accommodation allowance during travel, as well as petrol, fuel and vehicle maintenance allowances. Besides, the company is also cutting down on other charges like power, electricity, mobile and telephone?, he said.
Hari Challa, managing director of Aliens Group said the company has cut down on its indirect expenses over the past 3-4 months. ?The company has trimmed its marketing activities, including print and outdoor marketing and travel expenses of employees have also been reduced significantly. We have not cut flab because of the recession. In fact, the company has expanded its team by 100 people over the last few months?, he added. When contacted a DLF spokesperson said, ?Cos -cutting is a routine exercise at the company. On a regular basis, we assess the strength of the company and take measures to improve the productivity levels. DLF is right now concentrating on projects that have immediate demand. Also, we have not put any projects on hold.?