MUMBAI-based Kalpesh Malhotra (name changed) was on top of world when he joined the marquee I-bank Lehman Brothers early this year. He was among the select few, picked after a rigorous recruitment session, from one of India’s premier B-schools at a salary of Rs 18 lakh a year. But in a matter of months, the dreams of a great future, global business travel and meetings with top honchos have turned into a nightmare. After America’s fourth largest I-bank filed for bankruptcy there was chaos, panic and despair at its plush Powaii office.
Kalpesh is not alone. He now shares his uncertain future with about 2,500 employees of Lehman’s India unit and about 23 lakh people who work in the Indian IT and BPO industry. Almost 60% of the IT-BPO companies get their bread and butter from American financial institutions like Goldman Sachs, Washington Mutual, Citi Group, Bank of America, Morgan Stanley and Lehman Brothers.
As these financial behemoths crash at Wall Street, lay-offs are being seen in Bangalore, Hyderabad and Chennai. Leading global HR consulting firm Manpower has drastically downgraded hiring outlook for India. According to Manpower, hiring outlook (% of companies planning to hire) dipped from 56% to 33% for quarter ending March 2009 for finance and insurance sectors. For IT-ITeS, the outlook has declined from 58% to 47%.
Companies are going to be badly hit, specially in the banking financial services &iInsurance (BFSI), IT and BPO, say experts. 5,000 jobs on the firing line
According to a estimates, MNCs in India in the BFSI and captive BPOs space may axe at least 5,000-8,000 people in the coming months.
Meanwhile at Lehman’s India unit, the fate of the 2,500 employees is as yet uncertain. At a meeting in Hong Kong this week, the company decided that the employees will get their September salary, but there was no word on their future. IT analysts forecast a grim quarter one and two of 2009 for IT hirings. To compound employees woes, HP on Monday announced it will cut 24,600 jobs globally, some of which will be in India.
Says Vikram Bhardwaj, CEO of Redileon, an executive HR firm: “All hirings, especially of top management across sectors is going to be badly hit in the ripple effect. From short to mid term, the scenario can only worsen, unless positive signals emerge from the US economy. Every new requirement for a hiring is being scrutinised heavily by the finance departments in IT companies.”
Though recruiting firms are downgrading outlook, top IT companies are still putting on a brave face ‘officially’. They are yet to downgrade their hiring guidance for FY09. But in reality, many companies (especially BPOs) have frozen new hirings and are only doing replacements. Companies like Satyam Computer Systems, Wipro Technologies, Infosys Technologies and Tata Consultancy Services (TCS) say that their earlier guidance remains constant, at least for now.
While Infosys is committed to hire about 25,000 employees in 2008-09, TCS said that it will hire about 35,000 employees. On the other hand, Satyam has plans to hire about 15,000 employees in FY09. It has upped its employee utilisation rate, which stands at about 75% for both onshore and offshore work.
“Whatever we announced earlier holds good as of now,” says TV Mohandas Pai, HR Head Infosys. TCS agrees. “We had announced plans to hire 30,000-35,000 people in FY09. We are on track with our hiring plans for the year. We have given a salary hike of 10% to our India-based employees and 3-4% to our international employees in FY09,” added a TCS spokesperson. This is despite the fact that TCS laid off about 500 people in February this year while IBM dismissed about 700 freshers.
But the doomsayers still hold their ground. Says Avinash Vashishtha CEO of Tholons, an offshore advisory firm: “The crisis will continue to loom till the second quarter of the next calendar year because the consolidation of banks and restructuring will take at least about nine months. Hiring plans of all top IT majors are going to be rationalised till then.” In fact, many of the large IT companies are gearing for a lean period that may linger on to the quarter one or two of FY10 as well. “If the crisis lingers till March, we will moderate the salary hikes for next year. This year nothing can be done as it has already been announced,” said a CFO of a top tier IT company.
Meanwhile, it’s also a time for headhunters to get active. For instance, at EMA Partners International, a headhunting firm, on Wednesday itself, four to five companies asked if they could hire some Lehman Brothers’ employees.
Though life will get tougher for those who have not seen the world outside Lehman Brothers. Counselling is what they need at this moment. There will be standard salary increments of 5-6% across sectors instead of 14-15%. In fact, some say, “People will be happy if they get their salaries”.