Unemployment looms large over Kerala IT horizon

In August 2007, a leading engineering college in Thiruvananthapuram, Kerala had invited applications from engineering graduates to a couple of vacancies of lecturers, offering a handsome package. But there were hardly any takers for the posts.

A year later, in 2008 October, the same college invited applications to two posts of guest lecturers in Computer Science. And, the response was unbelievable. Nearly 100 engineering graduates turned up for the selection.

This simple instance reflects the grim scenario in the IT sector in the state. The shake up in the US economy and the global recession that followed have its repercussions in God's on Country too.

Though the industry leaders kept on denying the reports of cost-cut measures by the IT companies in the state, they became mum as IBS Software Services based at the Thiruvananthapuram Technopark had given the pink slips to about two dozen IT professionals.

While IBS's version is that it was only a 'performance based termination', the expelled employees contradicts it claiming that those who had even won the company chairman's best performer awards had also found a place in the chop-off board.

"About forty per cent of the software export from Kerala is to the US and hence it's obvious that any minute fluctuations in the US market will have its direct impact on the state," says Thomas Mathew, an IT professional in the city.

"Termination is nothing new in the IT sector. About a year back, another leading firm in Technopark terminated a good number of software professionals. Since the IT sector was at its peak at that time, those professionals did not take much time to get a better placement," Mathews adds.

But in the present scenario, it's quite difficult to get a fresh placement as almost all companies had put a sealing on the recruitments, he says.

Besides causing serious social problems owing to overnight terminations, the slow down in the IT industry is also having its impact on the state's economy as the fund flow from abroad would come down.

The skyrocketing growth of the IT sector had in fact contributed to the over all development of the state. Real estate, construction and automobile industries had witnessed a massive growth in Kerala over the last few years, which could definitely be attributed to the hefty packages offered in the IT sector.

"With reports of IT slow down coming in, there is definitely an uncertainly in the construction sector also. The response to some of our new projects is not as impressive as what we received till a few months back," says a leading builder in Kochi.

Meanwhile, a haste intervention of the state government into the termination of IT professionals by IBS had irked the IT entrepreneurs.

Following reporters of over-night termination from IBS, the state Labour Minister deputed a team of officials of his department to look into the issue. This action had invited widespread criticism from the industry.

G.Vijayaraghavan, founder CEO of the Technopark had even termed the move as a suicidal one that would scare off the investors from the state.

This is not the sunset of the IT sector. Every steep will be followed by a slope. With a state-of-the-art manpower, the IT companies in Kerala could maintain its growth by shifting the focus to other parts of the world, say experts in the filed.

Hundreds layoff from Techo Park and Info Park

Under the pretext of global economic recession many employees from the Info Park and Techno Park have been facing expulsion.  Within 16 days about 80 persons were dismissed from the service in these places. Some of the companies even deprived the employees of even their benefits.

The existence of some of the companies in these places are under serious threats.  The process of expulsion is kept secretly. One person was dismissed when he had gone for treatment at home. One firm had expelled 16 persons at a stretch on the same day. They were  not even given an explanation why they were dismissed.

Most of the employees of the leading IT firms are under the threat of expulsion. New recruitments have been stopped and campus recruitment have come to a standstill.  Many companies had already started curbing the benefits of the employees even before the economic recession.  Under these developments it is estimated that only one third of the  employees will  be surviving in many firms.

Get ready for depression

As the global financial system went into free-fall,my children and I spent a free Wednesday evening playing a board game that was developed during the Great Depression of the 1930s, Monopoly. It is basically a game of buying and hoarding properties, developing monopolies, and forcing your opponents into bankruptcy (obviously a genial family game). It’s an apt game at a moment when the planet is headed for another economic depression.

Many “average” Indians seem nonplussed; they think the current global financial meltdown affects only Americans, Europeans and those Indians who are rich enough to play the stock markets. They appear to hope the crash of stock markets around the world will herald the downfall of Western civilization (such idealists should play Monopoly with my ruthless son).

Even our TV news channels have a strange attitude to the economic crisis: during the day, they go on and on about the Bombay Stock Exchange’s Sensex being in sight of the 10,000-mark; but in the late evening,when it’s time for news analysis, they will go on and on about Sourav Ganguly.

This is even more bizarre considering how often our finance minister is on TV these days, repeating how India’s economy’s fundamentals are strong, and that though there is a liquidity problem there is no reason to panic.Hmm.Whenever someone important starts telling you every day that there’s nothing to worry about, it means there is something to worry about. Especially someone as TV-camera shy as P Chidambaram. Or someone like the US president, George W Bush who, despite being deeply loved by India, had been keeping a low profile (till the crisis went into top gear).

Theirs is a tough job. The Wall Street financial crisis has made money scarce. People and companies are withdrawing money from banks; there isn’t any for businesses, which need cash for their day-to-day operations.

Businesses will soon start failing, and the number of jobs will start falling. Chidambaram and Bush are walking a tightrope: being on TV is necessary to reassure markets and bankers about the light at the end of the tunnel; but being on TV is a reminder to everyone that they are indeed in a tunnel, and that contributes to panic. Panic erodes trust. Look at any currency note on the planet, and you will see that it is trust that makes that note valuable (in India, you trust the RBI governor to keep his promise to pay you the amount of the rupee in your hand).

The disappearance of trust is at the heart of the worldwide economic crisis.

There are some, like the government’s chief economic advisor, Arvind Virmani, who think the crisis may bring India “collateral benefits.” This is wishful thinking, premised on the belief that the world crisis will be short-lived, say, six months or so.

This is also based on the belief that India’s reliance on foreign money is mostly in sectors like realty; we can continue building our infrastructure with our own money, as we have been doing, and keep growth at a relatively high pace.

That would be soothing if it did not finesse certain realities. The rupee is about to touch 50 to a dollar; that’s because the shortage of money in the West is sucking dollars from all corners of the globe, driving the dollar up (and the rupee down). Oil is about to touch $80 a barrel (and should head further south by the time OPEC meets in November) but Indian oil companies are complaining that our banks are not lending them money for the day-to-day operations. And to top it all, Chidambaram says the government will help liquidity by putting money into the market this month for the farm loan waivers and the pay commission awards. This finesses the fact that these electoral bribes add to our current account deficit, which adds to our vulnerability to the financial crisis. A recent Citigroup report says India is among the most vulnerable on this score, and China among the most resilient.

To say the crisis will be short is to be intellectually dishonest. India will not have “collateral benefits” if the commodity prices come down, because the world is entering a deflationary period. (Ironically, just months ago we were worried about inflation, or high prices; now we’re worried about prices dropping endlessly). In a deflationary spiral, prices get lower, but no one buys because they think prices will get even lower.

So prices do fall further. Interest rates drop close to zero, so loans are virtually free, but no one borrows because they do not want to add to their debt. Businesses fail, people lose jobs, governments lose revenue, and economic activity grinds to a halt. This happened at the outset of the Great Depression of the 1930s.

If you are still unsure, look at the seriousness of the crisis (which no one can admit to, because it would worsen the crisis).

The world’s financial system is living in a reality that is day-to-day. Each market, each finance minister and each central banker is somehow praying that each day will end without too much damage. But it does not.

The bailout of the insurance giant, AIG, satisfied the stock market, but for only a day.

The whopping $ 700 billion US bailout to ensure bank liquidity helped the markets for about half a day, before they returned to free-fall. The central banks of the US, some European countries and China coordinated a rate cut, but that did not slow the fall. England set aside 50 billion pounds for its banks, but its citizens were still panic-stricken because three Icelandic banks had failed and Reykjavik was verging on bankruptcy (many Britishers kept money in Iceland’s banks because they kept unnaturally high interest rates to offset inflation).

Clearly, nothing short of decisive and farreaching action will save the world from another depression. Japan had a financial crisis that lasted the full 1990s because they were slow to act. The Swedes had a crisis in the late 1980s that was painless because they swiftly acted. Coincidentally, the G-7 and IMF meet this weekend, and it should be an occasion for finance ministers of the world to coordinate for some decisive action.

Decisive action in the form of government spending, both for public works (in order to create jobs) as well as for helping banks, needs intelligent and decisive leaders. Unfortunately the planet is led by Bush, a man who is deeply unloved by his own Republican party (he couldn’t even convince them to vote for his bailout plan the first time around); a man whose every policy has been a damaging failure; a man who looks intelligent only in comparison to Sarah Palin, who vice-presidential debate revealed to be brainless and incoherent.

At the moment, you can’t help but feel that even if we manage to avoid another Great Depression (whose marker was a big stock market crash 79 Octobers ago), we’re in for a long, deep recession. And far from collecting “collateral benefits”, India faces the possibility of a hard landing ! 

US job cuts accelerate, recession fears rise

U.S. employers cut 159,000 jobs last month, a ninth straight monthly reduction and the deepest in 5-1/2 years, the government said in a report on Friday that suggested the economy may be in recession.

The Labor Department report showed 760,000 jobs lost so far in 2008. The unemployment rate in September held at a five-year high of 6.1 percent as 121,000 people quit the workforce.

The bleak hiring outlook and a separate report showing a sluggish service sector that barely grew last month added to a string of recent negative news, including weak personal income and spending, declines in manufacturing and declining factory orders and shipments.

"The problems of Wall Street have now hit Main Street with full force," the chairman of the Joint Economic Committee, Sen. Charles Schumer of New York, said ahead of the U.S. House of Representatives' vote to approve a $700 billion rescue package for banks and other financial firms.

The proposal, passed earlier this week by the Senate, will enable the Treasury to buy bad assets, including mortgage-related securities from financial firms in hope that will persuade them to resume normal lending and ease a credit market freeze.

Treasury Secretary Henry Paulson praised lawmakers for passing what he called "key and critical" measures to help protect or at least slow losses of U.S. jobs and savings.

The Treasury will use auctions and other measures to take the illiquid assets from banks, holding them until it can resell them and possibly profit. Paulson said the Treasury will spell out how it intends to act in coming days.

Investors clearly remained worried about the economy's prospects, notwithstanding the fact that President George W. Bush swiftly signed the bailout bill into law.

The Dow Jones industrial average shed early gains to end down 157.47 points, or 1.5 percent, at 10,325.38, marking its worst week for losses in seven years. The high tech-laden Nasdaq Composite Index lost 29.33 points, or 1.48 percent, to close at 1,947.39.

Prices of U.S. Treasury debt securities reversed course to turn positive as buyers sought safer haven in the face of falling stock prices. The dollar's value dropped against the euro following the House vote.

House members put the best face on their decision to change their own course -- approving the rescue package on Friday after rejecting an earlier version on Monday -- and appeared to be swayed by the weak jobs and other economic signs.

A BAD HAND DEALT

"We were dealt a bad hand. We made the most of it. I think the American people will benefit from it," House Speaker Nancy Pelosi said after the vote, which cleared the way for the legislation to be signed into law by President George W. Bush.

The economy will remain under strain for a protracted period, analysts said, with all the risks to the downside unless confidence can be restored to markets and to consumers.

White House spokesman Tony Fratto said the job report was disappointing but not surprising. "Everyone should understand that it will take some time for our economy to recover from the housing correction, elevated energy prices and the credit crisis."

September's job losses were much more severe than predicted by Wall Street economists surveyed by Reuters, who had forecast 100,000 jobs would be cut.

Separately, the Institute for Supply Management said its index of non-manufacturing activity eased slightly to 50.2 in September from 50.6 in August. A reading over 50 implies growth, so last month's soft reading showed the sector was virtually stalled.

Some analysts said the economy may be headed into a potentially severe slump, especially with a total of 760,000 jobs having disappeared so far this year.

"We've seen weaker data in history, but these look pretty decisively to be the beginning of something worse," said Pierre Ellis, senior economist with Decision Economics Inc in New York. He added that it might make the Federal Reserve more inclined to cut interest rates despite its concern over inflation.

Roger Kubarych, chief U.S. economist for UniCredit Global research in New York, said Fed action was vital.

LOOKING TO THE FED

"As a result of a series of ugly economic reports and a worrying widening of the financial crisis, we conclude that the Federal Reserve will move quickly to buttress the emergency financial assistance program with a reduction of the federal funds rate by 50 basis points to 1-1/2 percent this month," Kubarych said.

The Fed's policy-setting Federal Open Market Committee is next scheduled to meet October 28-29 but there has been speculation that central bankers could coordinate a global rate cut if financial markets continue to be wracked by turmoil.

The September job cuts follow revised losses of 73,000 jobs in August and 67,000 in July and show the decline in employment is accelerating. Some 51,000 manufacturing jobs were lost last month on top of 56,000 cut in August, the 27th straight month in which manufacturers slashed their payrolls.

Job cuts were nearly across the board in September in every major category with the exception of government, which added 9,000 jobs.

The average work week in manufacturing industries was the lowest in three years at 40.7 hours.

Overall hours of work in all industries slipped to 33.6 a week in September from 33.7 in August -- the lowest since November 2004.

Hurricane Ike, which hit the Gulf coast, and a strike at aircraft maker Boeing Co. did not impact the data because the employees affected were on payrolls for at least part of the Labor Department's survey period.

IT professionals worried as industry downsizes

India has emerged in the last decade as a major player in the information technology business sector. Exports alone generate billions of dollars in annual revenue. But this economic mainstay is having a lot of trouble under the weight of a global economic slump.

Twenty-five-year-old Arun Dahiya is one of the many young Indian IT professionals who will go on to become the backbone of one of India's signature industries.

Arun recalls the day he got his IT job, "I felt very proud, I felt I have done justice to my parents who have spent a lot of money on my education," he says..

However, the financial crisis has sent ripples through India's famed industry - where the top IT companies get roughly 30 per cent of their revenue from banking, insurance and financial services. All industries at the core of the crisis.

Arun and his friends - IT professionals - discuss the downturn in the industry - and are bracing themselves for bad news. Twenty six-year-old, IT professional Kapil Bajaj says the financial crisis has costs his friends their jobs.

"They got news on Friday that their employment is terminated. So it becomes a kind of chaos like situation and people get nervous," says Kapil.

A company that claims it trains one out of every three IT professionals in India - says India will have to specialise and sharpen it's skills to stay ahead in the industry.

"I think what we have to continuously do is upgrade the overall skills quotient of the Indian IT industry," says CEO NIIT, Vijay Thandani.

Industry experts say junior level employees like Arun shouldn't expect to see the rapid rise in salaries they once had. And Arun says the crisis has made him more realistic about his prospects.

"I think my career is at stake right now and I have to be very cautious about it. I'm just keeping my fingers crossed," says Arun.

Meanwhile, like Arun, tens of thousands of other young Indians share the same hope.

India submerged in the meltdown

In February this year, Tata Consultancy Services announced that 500 of its employees have “voluntarily resigned” after an annual performance check. IBM followed suit with its downsizing plans and unconfirmed reports said the company had shown the door to almost 700 employees in India. The two companies were then roundly criticised for their obsession with handing out pink slips.

Just seven months later, those criticisms seem like a bad joke. Recruitment consultants now say every one in 10 people employed in India’s banking and financial services and the information technology industry risks losing his job because of the global financial meltdown.

The situation has become worse after the collapse of Lehman Brothers and the sell-out of Merrill Lynch on Monday. At least three top recruiting firms in India say, in the last 24 hours, many companies have asked them to stop hiring.

Layoffs are still a highly emotive issue in India and no company is willing to put any number to the people being asked to ship out, but all of them are consistent about the fact that the annual performance reviews have become stricter this year.

Satyam, for example, has denied the buzz that about 9 per cent of its employees may be fired. But the company’s official statement says that as part of its appraisal process, the company identifies “around 5 per cent” of its employees for “performance improvement”. That’s a substantial number, considering the software giant has around 50,000 employees on its rolls.

Wipro isn’t far behind. The company has reportedly put 4 to 5 per cent of its employees under the non-performance scanner. The company’s official position is that some employees have been asked to move on, but the number is significantly lower than 2,000.

It’s certainly not IT companies alone. A host of broking firms admit that many of their employees are on “paid holidays” — a luxury they can ill-afford. And already quite a few of them have “politely persuaded” some of their people to leave. The numbers are still small, but the trickle may soon turn into a deluge if the panic in the markets continues for a few more months, Even the manufacturing sector, which has been largely untouched by the turmoil, may tighten the screws as far as hiring is concerned.

The instant fallout of what’s happening on Wall Street becomes clearer if one adds the uncertain fate of the over 2,500 Lehman employees in India and the estimated job loss of at least 1,000 Indian employees at Hewlett-Packard following the company’s decision to eliminate nearly 25,000 jobs worldwide.

That the future is bleak becomes clearer from the fact that US employers are expected to make their deepest cuts in staffing in almost seven years. Just a day after the Lehman and Merrill news broke out, New York Governor David Peterson forecast that Wall Street might lay off over 40,000 workers. To put this in context, Wall Street’s job force totalled 181,000 in July, already down by 11,000 from a year earlier.

HR consultants in India say the impact of what’s happening in London will complicate matters further and Indian employees are bound to feel the shock. For example, the layoff figure in UK’s financial district is expected to reach up to 50,000 over the next two years. The collapse of Lehman, which has a staff of 4,000 in London alone, adds to the misery of the financial services industry in that country. And that’s horrible news for companies dependent on Europe’s BFSI segment, that has added more jobs than all other service sectors combined since 2004.

Greg Savage, International CEO of Aquent, a US-based global staffing firm, says he was in London last week and wasn’t surprised when he got calls from some of the earlier hard-to-get professionals looking for a job.

Savage, whose firm specialises in marketing, communications and creative talent, says things are tough in India as well and companies will obviously get rid of mediocre employees as they can no longer afford to operate in a high-cost environment. Besides, some of the excesses of the past, when companies recruited anybody with a pair of hands, are bound to have its fall-out.

But the picture isn’t entirely grim for job seekers in India, Savage says. Employees with sought-after skills may still be able to demand hefty pay from potential employers. “In the media space, for example, employees who have retooled their digital skills, will have no problem in getting chased by head-hunters,” he says.

Savage is right. Companies may have more bargaining power now than they did a few years ago, but they will still pay well for top talent as it doesn’t make sense for them to undercut employees they want to retain in the long term.

So things will pan out well for the creamy layer. But for the rest, the future is clear: prepare for more job losses. It’s that time when many may feel lucky to just have a job.

Major IT firms expected to announce job losses

The Wall Street crisis could result in the loss of 20,000 to 25,000 jobs in India, says the Times of India, with the leading IT companies likely to announce huge layoffs in the next few years.

Satyam is planning a substantial cut in its labour force, and a couple of weeks ago Infosys reduced its workforce by about 3,000 employees. HP has also laid off 24,600 workers. An HR professional at another leading IT firm, who wished to remain anonymous, said that during the mid-year appraisal to be held between October-November, large-scale job cuts may be announced.

Many other companies have ordered recruitment firms not to hire any more professionals, according to Rajiv Mehrotra, country GM of hiring firm Kelly Services India. Already, he said, the Indian job market has already been affected by the troubles of Lehman Brothers and Merrill Lynch.

The banking, financial services and insurance (BFSI) sector, the largest outsourcing vertical for Indian technology players, contributes up to 40 per cent of revenues for some top IT firms.

Almost 350,000 industry staff are employed in the BFSI space. Amongst these, the top six players - TCS, Infosys, Cognizant, HCL, Wipro and Satyam - account for 180,000 jobs. This sector records $10 billion of the total $32 billion revenues posted by the industry during the last financial year.

Satyam shares drop on job cuts

Satyam Computer Services Ltd, India's fourth-largest software services provider, was poised for its biggest drop in five years after a report that the company may fire about 9 per cent of its employees.

Satyam, which fell as much as 12.8 per cent in Mumbai trading, the most since April 2003, was 9 per cent down at Rs 371.5 at 11:16 am. Satyam led a decline in technology stocks on concerns that the deepening credit crisis in the US will force clients to cut back on orders further.

Hyderabad-based Satyam and larger rivals Tata Consultancy Services Ltd and Infosys Technologies Ltd in July reported first-quarter profit growth slowed as Wall Street clients reduced orders and delayed new contracts. Since then, the deepening crisis has forced the US Treasury to take over mortgage lenders Fannie Mae and Freddie Mac and losses and writedowns at financial firms have crossed $500 billion.

Lehman Brothers Holdings Inc, once the fourth-largest US investment bank, intends to file for bankruptcy after Barclays Plc and Bank of America Corp abandoned talks to buy the crippled firm.

Bank of America plans to acquire Merrill Lynch & Co, the world's biggest brokerage firm, for about $50 billion.

Satyam may cut as many as 4,500 jobs, the Economic Times reported today, citing unidentified people.

As part of its appraisal process, Satyam identifies “around 5 percent” of its employees for “performance improvement,” the company said in an emailed statement. About half of them leave “either voluntarily or involuntarily,” Satyam said, adding the company had completed its latest appraisal a few weeks ago.

IT spending goes down in companies

Many large companies, especially those in the financial services, utilities and telecommunications industries, have cut their technology budgets this year because of the economic slowdown.

In a report, Forrester Research Inc found that 43 per cent of large US and European businesses it surveyed have cut their overall spending on technology products and services in 2008. Some companies, meanwhile, have put discretionary spending on hold and others are planning to negotiate lower rates for information-technology services.

The research firm did not change its annual technology spending forecast, but it is reviewing it. In its most recent forecast, in February, Forrester had said it expects tech spending to grow 2.8 per cent this year. That marked a significant downward revision from a December 2007 forecast of 4.6 per cent growth.

The report, said Forrester vice president and principal analyst John McCarthy, is "really just a snapshot" of companies' spending sentiments.

In general, corporate technology buyers were less optimistic than they were in the last such survey, in October 2007, just before the credit market tightened and the housing market "really fell apart," McCarthy said.

HP India to cut 1,000 jobs?

Hewlett-Packard’s decision to eliminate nearly 25,000 of its 320,000 jobs worldwide is expected to have a significant impact on its Indian operations too.

Analysts in India believe that in the short term, the company could see off some 1,000 people, and that in a three year period this could go up to 6,000 of its nearly 60,000 people in the country.

The computer and printer maker’s job cuts come as part of its plan to integrate Electronic Data Systems (EDS), the computer services giant that HP acquired for $13.9 billion in August as part of an effort to match IBM in the services space.

Following the acquisition, a workforce reduction was seen as inevitable, but the figure HP has announced is way beyond anybody’s expectations.

Kapil Dev Singh, managing director of research firm IDC India, said HP’s announcement mostly stems from the global economic scenario. “It’s an instant fall out of what’s happening on Wall Street. The IT accounts of banking and financial institutions (BFSI) have been shrinking. So hiring for this space has been put on a slow burner by global companies,” he said.

Mohan Lal Menon, managing director of strategy advisory firm Sentient, said a lot of overlapping was expected with the integration of HP and EDS Mphasis (in India, EDS had previously acquired Mphasis).

“Most of it would have been in the areas of HR, administration, sales and marketing. But the trigger for HP is definitely the precarious conditions in the BFSI space across the US, Europe and Asia. HP seems to be ahead of the curve, towards planning for the economic downturn,” he said.

Till the time of going to print, HP had not responded to questions sent by TOI on the impact HP’s workforce reduction move would have on India.

However, a senior official at Mphasis said no immediate impact was expected on Mphasis. “We have been hiring junior to top talent. We have been expanding our footprint across the country. So its business as usual,” he said.

Wipro, Copal mull Lehman BPO buyout

IT major Wipro Technologies and Gurgaon-based knowledge process outsourcing firm Copal Partners have expressed interest in bidding for the Indian back office business of Lehman Brothers Holdings, the US-based investment banking firm that filed for bankruptcy protection on Monday.

Lehman is expected to close its captive unit in Powai, a Mumbai suburb, by the end of this month. The unit's 1,200 employees, who work on equity research and analytics support for the mergers and acquisitions business, have been orally told to quit by September-end. They have also been informed that they will be paid only for this month, which will be treated as a severance package.

Investment banking sources said Wipro and Copal have been looking at buying opportunities in this space for some time. Though the Lehman BPO unit does not have an anchor client it may help them quickly scale up the business.

Wipro declined to comment and Rishi Khosla, co-founder and chief executive officer of Copal, could not be reached.

Copal Partners already has clients in industries such as investment banking, equity research, credit research, and strategy consultancy.

Unlike employees in Lehman's investment banking business, who have been receiving feelers from domestic banks, employees in the captive BPO are unlikely to find alternative jobs quickly because the IT and IT-enabled services industries have already begun downsizing, owing to the global financial crisis.

2,500 Lehman India employees' fate uncertain

The fate of 2,500-odd employees working for investment banking giant Lehman Brothers in India remains uncertain following its parent company's decision to file for bankruptcy protection in the United States.

Lehman said in a statement that its New York office intends to file for bankruptcy protection as it owes over $600 billion to lenders.

However, it highlighted that no other Lehman Brothers' US subsidiaries or affiliates, including its broker-dealer and investment management subsidiaries, are included in the filing.

The filing for Chapter 11 bankruptcy protection, which allows a company to restructure while creditor claims are held at bay, was made in the US Bankruptcy Court in the Southern District of New York by the investment bank's holding company, Lehman Brothers Holdings Inc.

The firm's public relations agency said that no official from Lehman would like to talk to the media. An employee said there was no work and a series of meetings were held on Tuesday.

Lehman set up business process outsourcing operations in India in 2005 and according to the fact sheet on the firm, the centre saw the number of employees going up by eight times by the middle of this year and had declared its plans to grow the operations.

In fact, it was recruiting till as recently as couple of months before.

The company has in all about 2,500 people working for it in India, including those in the BPO unit. Recent news reports said the company had asked a section of its BPO staff to quit.

Over 5,000 workers in the United Kingdom have lost their jobs after the collapse of US investment bank Lehman Brothers.

Layoffs...

TCS planning more layoffs, Wipro sacks 1000, Satyam to axe 4,500 ... It seems the days of pink slips have come to haunt Indian IT pros. Though all companies have termed these terminations performance-based, it is anyone's guess that global slowdown has started hurting Indian IT cos.

Late last year, the global IT giant IBM had reportedly laid off 700 entry-level trainee programmers (ELTPs) across its offices in India. Zensar too had reportedly given pink slips to 2 per cent of it staff, again the company claimed that it was on performance basis.

The increments and salaries too have been a causality at most IT firms.

Patni cuts off workforce by 3%

In July, Mumbai-based Patni Computer Systems too gave pink slips to 400 employees on grounds of non-performance.

Terming it as a routine exercise and not a slowdown setback, country's sixth-largest exporter said that it is an effort to weed out non-performers.

Rajesh Padmanabhan, vice-president and head, global HR, Patni, said, "This is an absolutely regular appraisal that is important for any performance-driven organisation. It is something standard we do every year. Employees who have got 0-1 rating on a scale of 5 typically form the basis for the first-level shortlist. These are performance-based resignations; we've not issued any termination letters.”

However, industry sources reveal that the laid off employees included several project managers as well. Incidentally, while in case of TCS, the retrenched number was about 0.5 per cent of the workforce, for Patni, it made for closer to 3 per cent of the 14,800-strong workforce.

Narendra K Patni, Chairman and CEO, Patni Computer Systems said, "The overall market environment remains challenging with prevailing global uncertainties. We are cautious in our short-term outlook but remain positive on long-term prospects and are continuing our investments in identified areas."

Wipro lays off 1,000 employees, and another 2,000 put on scanner

The bad news has come from India's third largest IT outsourcer, Wipro Technologies too. The company has already laid off 1,000 employees, and another 2,000 employees have been put on scanner.

The company is reviewing the performance of 60,000 global IT services employees from the senior leadership team down to the person with one-year experience.

Terming it as a regular exercise, company's corporate vice-president (human resources) Pratik Kumar said, "As the appraisal cycle gets over, a multi-layer review happens. Following that, people who have fallen in the lower quadrants of performance are put on watch. Some are asked to pull up and others are asked to move on."

He added that, "We took a closer look at our hiring and realised that we did not need to hire more, since there were people on the bench." Many employees are being given counselling to improve their performance, others may be asked to leave.

At the end of the quarter ended June 2008, Wipro’s IT services employee base had fallen to 61,345 from 62,070 employees at the end of the previous quarter.

Tata Consultancy Services is gearing up to another round of layoffs.

According to a recent report Asia's largest software exporter, Tata Consultancy Services is gearing up to another round of layoffs. The company also plans to discourage employees from staying on bench for more than two months on any of its centres.

Incidentally, the company had also fired close to 500 employees, citing poor performance after its annual appraisal. It was also among the very first companies to announce a cut in the employee variable pay across the board.

The company which sees some project delays this quarter, but no cancellations, terms this as an employee utilisation exercise. The process will involve counselling employees and training them. Employees would be asked to undertake projects on which they have never worked on and will have to update their skills.

Recently, TCS also retrenched 15 employees from its Australian subsidiary. Interestingly, last month too, the company had shown door to some 25 employees from its Kolkata and Bangalore centers for fudging CVs.

By June-end, the total employee strength TCS stood at 116,300, across 64 countries. The company hired 8,982 employees in the first quarter.

Satyam to downsize its workforce by a whopping 4,500 employees.

After delayed appraisals and cut in payouts, India's fourth largest IT service provider, Satyam Computer is reported to downsize its workforce by a whopping 4,500 employees. This translates to a little less than 9 per cent of the 51,000 employees that the company employs.

Company sources reveal that 1,500 employees have been put under the performance improvement plan (PIP), euphemism for employees put on watch list and asked to shape up or ship out. Apart from this, 3,000 others have not been given any increment in the last appraisal cycle, thereby indicating that their services are dispensable.

Last Friday, company’s chief Ramalinga Raju had sent out an email to all employees warning them, especially the ones on the bench, to not bunk office and be in their best dress code, failing which they may face strict disciplinary action.

The company is reported to have handed pink slips to about 400 engineers and associates in Hyderabad, Pune and Visakhapatnam centers. The company management reportedly asked some of the employees to move out of its rolls to a contractual agreement or leave.

Like its peers, Satyam too claims that the layoffs are a part of its appraisal system. Global head, human resources, SV Krishnan says, "Our experience has shown that around half of them exit the system either voluntarily or involuntarily. We have concluded our appraisal process some weeks back, and we believe we are witnessing similar trends like those in the past."

There were also reports that the company has deferred the joining date of 7500 graduates it had recruited from various college campuses this year. However, the company said that it has no intension of withdrawing these offers. Interestingly, the company has recently announced plans to hire 15000 this year.