SAP asks its Indian vendors to axe 1000 jobs

Bangalore: SAP Labs India is planning to make big cost-cuts. The company has asked its vendors to axe over 1,000 people contracted to it by December. The move was followed by delays and cancellation of projects by customers, reported Financial Chronicle.

Those contracted staff now at stake have been working for R&D and the global services arm of SAP, a German ERP company, through its partners in India.

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In India, SAP HAS 20 service partners. TCS, Infosys, Wipro, Satyam and HCL, and multinationals like IBM, Accenture and Capgemini are some of them. The company also boasts of six technology partners, including Intel, Microsoft, Sun Microsystems and Novell. And these companies employ several thousand professionals in India on behalf of SAP.

A SAP employee says that the company has asked many of employees in Bangalore to take half a month's leave without pay. The action comes in the wake of chief executive officer Henning Kagermann's email to employees calling for a series of cost-cutting measures and freezing all new hiring.

Responding on the issue, SAP Labs India sent this e-mail to Financial Chronicle: "As per normal practices in anticipation of an economic slowdown, SAP has taken a series of prudent and appropriate steps to assure cost-efficient operations of the company during this period of economic uncertainty. The initiatives SAP has taken are in line with sound business practices and as a result of mutual consent and evaluation of the pros and cons that could result with such measures. As a company, we strongly believe this is what any responsible management is expected to do in such uncertain times. These steps are taken to insulate the organization from any potential threats. No layoffs, as are being reported, have been planned thus far; we are conducting a detailed evaluation on the basis of our business requirements and will realign all our resources to optimize operational efficiencies."

However, the layoffs are expected to have a marginal impact on revenues of the vendors since most of them derive most of their SAP related revenues from projects won directly. Most of the Indian players have been trying to focus on SAP implementation and consultancy to beef up their revenues. Companies also look at acquiring SAP skills, evident in the Infosys and HCL bids for Axon, a SAP consultancy firm in the UK.