Bangalore: A spate of layoffs by Indian technology service firms is part of an ongoing, regular termination of services of workers performing below expectations and not related to a widely anticipated contraction in spending on information technology by customers in the US, say senior executives of the services vendors.
Several reports in India’s business press in the last few weeks have said companies such as Tata Consultancy Services Ltd (TCS), International Business Machines Corp.’s India unit, Yahoo India Research Pvt. Ltd and Mphasis Ltd have fired between 40 and 500 workers each, anticipating slowdown in the US, the biggest market for India tech and back office vendors.
Pink slips: The Infosys campus in Bangalore. In the last three years, 2,500 employees have been asked to leave the company.
“You lay off people when you see bad economic condition. Nobody has said they have laid off people,” insisted T.V. Mohandas Pai, head of human resources and board member at Infosys Technologies Ltd, India’s second largest software services firm by revenues. The so-called churn in employees linked to non-performance is being misconstrued by many as layoffs related to business conditions, he added.
In fiscal 2008, the Indian software and back-office services industry is hiring 430,000 workers and by March, the industry is expected to employ some two million, the second largest pool of tech workers in the world. Compared with the people employed, the employee churn due to non-performance is small, he said.
Infosys sees termination of services among its workers for performance reasons at 1.2% of its workforce annually, Pai said, adding this percentage was steady in the last three years and there is no change this fiscal year. At that rate, the total employees asked to leave Infosys is around 2,500 people in the last three years. The Bangalore firm, which has more than 88,600 on its rolls as of end-December, is on track to add its targeted 32,000 this fiscal year, Pai said.
“People being asked to leave on performance grounds was a normal part of the IT firms’ employee appraisal exercise,” said Harit Shah, equity analyst at Angel Broking Ltd. “There could be some cause of concern because there’s no clarity on the IT spends (in the US).”
A senior executive at Wipro Ltd said overall “involuntary attrition” due to non-performance and integrity issues has been in the range of 2-3% annually for the past three years. “I see no change in that,” said Pratik Kumar, Wipro’s corporate vice-president and head of HR.
Mint had reported on 11 February that non-performance-related employee churn in the Indian IT industry would increase as companies turn their focus on performance to rein in costs and improve productivity.
TCS, which asked about 500 employees to leave the company in fiscal 2008 since April, said its involuntary attrition rate has stood at around 0.5% for the past three years. “If the layoff was linked to the slowdown in the US, why would we be hiring 28,000 employees till date,” a spokesperson said.
TCS, which has an employee base of 108,000 as of December quarter, said contract terminations were across all levels at the firm.
At Satyam Computer Services Ltd, the number of people sacked have been hovering between 1% and 1.5% in the past three years, said S.V. Krishnan, head of HR at the Hyderabad firm.
Mid-size companies such as MindTree Consulting Ltd have not seen any significant employee churn due to performance issues, said the firm’s HR head Puneet Jetli.
At Yahoo’s Bangalore offices, services of some 40 workers were discontinued on 13 February, which the firm’s India head called “an accelerated manage out.” A majority of the sackings, said Sharad Sharma, chief executive of the Yahoo unit, “were due to performance...some affected were those whose skill sets that won’t be relevant as we move forward”.
Yahoo, which doubled its India workforce to 1,500 in 2007, said it continues to hire some 80 a month.
IBM’s local unit has declined to comment on the reported sackings.