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News >> Technology >>
Onsite employees feel the punch of recession in U.S.
By siliconindia
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Wednesday, 20 February 2008, 01:26 IST
Bangalore: After the shelving of workforce in India, it is the onsite employees of IT majors who next face the effects of the imminent recession in the U.S. Indian IT services companies operating in the American markets are likely to cut the onsite allowances of employees deployed at clients' offices abroad by 25 to 30 percent from April 1, 2008.
Leading Indian IT service providers like TCS, Infosys and Wipro have launched independent studies to arrive at the revised "per diem" (daily rate of payment) for onsite employees in an effort to cut costs. The move follows IT majors like IBM, TCS and Yahoo weeding out staff for "poor performance", reported Business Standard.
The payment of salary to onsite employees varies from company to company. Some companies, for instance, deposit the basic salary into the employees' account in India and pay a per diem rate towards their daily expenses.
Infosys pays a per diem of $45 currently to its onsite employees but there are talks of a proposal to reduce it to $35 per day though officially unconfirmed. However, a few employees of Infosys admitted to having been informed that there could be a reduction in per diem for onsite employees in the US.
"Earlier, most of us could make a saving from the per diem allowance. If it is reduced to $35 per day, we will not be in a position to do so and onsite postings will not be attractive anymore," an Infosys BPO employee said. Infosys is also looking at other markets for growth in an effort to reduce its dependence on the U.S.
Wipro, on the other hand, is hiring more local talent at client locations to reduce deployment of staff from India for onsite assignments.
Recently Wipro Chairman Azim Premji had said, "If we hire people locally, it will displace people we send from here on H1B visas. So net-net, it will not mean an extra cost to us."
TCS pays 1,900 Euro per month to each onsite employee in Europe. "We have been told that the per diem rate for the U.S. is being revised. But the per diem for onsite employees in Europe will not change," said a TCS employee.
European IT services companies operating in India too are planning to reduce the per diem rate. Logica CMG ? which has deployed a large number of Indian employees on site for clients in the Netherlands, Belgium and the UK ? plans to cut the per diem rate by 30 percent.