Bangalore: The world’s largest personal computers maker, Hewlett-Packard Co., or HP, will not offer annual salary increases due in February to employees, including those in India, where around one-fifth of its workforce is based.
HP also plans to cut discretionary, or optional, spending to tide over the global economic crisis that has hit companies’ technology budgets. HP, which employs 320,000 people globally, of which 60,000 are in India, will limit fresh hiring to jobs that focus on generating revenue. “These are difficult actions, but necessary in the current environment,” HP’s leadership team, headed by chief administrative officer Pete Bocian, said in an email to staff on 27 November.
The average increase is usually around 14%, said an HP India employee, who did not want to be named. The internal email, reviewed by Mint, encourages staff to have meetings “virtually” or through technologies such as video and teleconferencing and restrict travel to customer activities.
An HP India spokeswoman said the firm has a long-standing and disciplined approach to managing costs, but declined to reveal potential savings. “In this difficult macroeconomic environment, we believe it is prudent and responsible to reduce costs where possible,” said Bina Raj Debur, director for corporate marketing at HP India, in an email.
Analysts say salary increases across Indian technology service firms could be zero or minimal in 2009. Senior personnel could see their salaries come down because their pay includes a variable component of as much as 35% tied to them meeting specific benchmarks. At Indian firms, performance appraisals are due from April.
“Basically, I don’t see a salary hike in 2009, mainly in software and BPO (business process outsourcing) industry. In fact, (there will) be an overall reduction in compensation by (as much as) 20% for senior management,” said Kris Lakshmikanth, chief executive at Head Hunters India Pvt. Ltd, an executive search firm.
Technology service firms such as Tata Consultancy Services Ltd (TCS), Infosys Technologies Ltd and Wipro Technologies Ltd are also economizing through measures such as reducing power consumption, cutting travel and postponing capital expenditure such as buying new computers.
TCS can save around 2% of average sales and general expenses of 20% through a combination of such measures, said Vish Iyer, chief financial officer, global business operations, at the Mumbai company.
On 2 December, The Economic Times newspaper reported that Infosys CEO S. Gopalakrishnan had asked employees to reduce costs by at least $10 (about Rs500) each in a one-time effort.
“Infosys has over 100,000 employees and each employee has the potential to make a difference to the company’s success,” the company said.