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The Smart Techie was renamed Siliconindia India Edition starting Feb 2012 to continue the nearly two decade track record of excellence of our US edition.

When the Going gets Tough..

Jaya Smitha Menon
Monday, September 1, 2008
Jaya Smitha Menon
It is well said that when the U.S. sneezes, India catches cold. Nothing could have proved it better than the current scenario in the IT industry which is facing a tough weather since the U.S. economy went into its cyclic recession. They are resorting to various measures to cut costs and firm up the situation. The measures range from slowing hiring, deferring placements, cutting on the variable components in the salary, or even handing out pink slips to serveral hundred employees. Besides the recession, there is yet another peril to the IT Industry—the U.S. elections, which will probably decide the future of many outsourcing companies that concentrate largely on the U.S. market. The new government could take a stand that American Corporations should not outsource to countries like India. Hence the industry is keeping a close watch and is planning every move very cautiously—a lesson learnt from the dotcom bust in 2001.

Layoffs, or is it Fine Tuning? As the industry is cutting the corners to tide over the tough times, there is a big question that is looming in the minds of every techie today— Is the sword of Damocles hanging on my head too? It all started when news on layoffs and retrenchments started hitting newspapers, websites, and channels with a frightening regularity. Never in the past has retrenching excess people or weeding away non-performers caught so much attention. As of now, around 10,000 employees have been laid off after companies like Siemens, TCS, IBM, Hexaware, Keane, Sapient, Yahoo, Lehman Brothers, 24/7 Customer, Magma Design Automation, and others took to the strategy of down-sizing. Market is also agog with names of tier II software services companies laying off people. According to our sources, companies are even asking some of their employees in IT divisions to move over to the BPO segment to avoid being laid off.

When the economy was booming and business was at its peak, companies hired talents in bulk anticipating future needs. But now, as future looks bleak or uncertain, they are reducing the numbers while hiring, and weeding out non-performers. However, it is true that the process of weeding out the non-performing employees was always there, but not in such a large scale. This time, top companies are defending themselves by giving the reason as ‘poor performance’. Moreover, it is a known fact that these IT companies hire after 3 to 5 rounds of interview. “Lay off is not a new phenomenon however, it’s true that it’s happening, but not at the scale it happened during the 2001 dotcom bust. It’s the imbalance between talents - who meet the company’s performance standards and who do not meet - that is pushing companies towards weeding out non-performing ones,” says Dhananjay Bansod, Chief People Officer, Deloitte, India.

Notably, hiring has also slowed down. Now companies are following a just-in-time hiring policy. Earlier, the companies used to hire people on anticipation of adding new clients or projects. Hence 20 to 25 percent of people in the bench were considered normal. But not any more. “Firms are in the process of utilizing their bench strength to the maximum and gain billability,” explains Anshuman Das, Co-Founder and COO, CareerNet Consulting. However, niche skills are still in demand.

Quality hiring is gaining more importance today. “Earlier, companies used to hire candidates who used to meet 50 percent expectations. But now they are insisting on candidates who meet 80 to 90 percent expectations,” explains Ajay Dutt, Vice President, NewEra Consultancy.


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