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Shock and dismay in IT sector

Friday, 14 February 2014 - 6:00am IST | Place: MumbaiBangalore | Agency: DNA

The IT capital of India is in a state of shock as following the sacking of around 800 staffers from IBM's Bangalore office, there is also the possibility of large-scale sackings from Infosys, Intel, Dell and Cognizant.

There has been no official confirmation from senior officials of IBM as a curtain of silence and gloom fell over the company.

It is learnt that all employees who were sacked by IBM were asked not to speak to media. One of the IBM India staffers who was sacked told dna he would like to comply with the diktat because he would not like to be blacklisted by the IT industry at large. "Word spreads fast. So, I'd rather stay quiet. There are lots of opportunities out there in the IT industry. I'm confident I'll land a new job within 2-3 months."

"You treated Indians like resource widgets. These people are human beings," read one angry posting by Solidarity4IBMIndia.

"People broke down after seeing the inhuman treatment," read a post in the Alliance@IBM employees' union website.

Even more worryingly, according to industry sources, Infosys is already working on a massive lay-off plan that is being implemented in its products, platforms and solutions (PPS) unit – said to be a key part of chief executive SD Shibulal's Infosys 3.0 strategy – which was set up in 2011. The idea behind this unit, media reports suggested, was to be able to get at least one-third of Infosys' revenues through intellectual property-based software products, platforms and solutions, by 2020.

This initiative – headed by Sanjay Purohit and also has Samson David as COO – however, is understood to be bleeding big time and hence the company management is working on a plan to turn it around and make it profitable. The first part of the plan, which is usual in this sector, is cutting down on employee strength.

Karthik Shekhar, general secretary, Unites Professionals, the 'only union for IT & ITES employees in India', said, "This (IBM job cuts) is extremely unjustified and sad. I don't have the official figures yet. But sacked employees are unlikely to take a stand against IBM, given the diktat not to speak to media. Doing so could get them blacklisted by Nasscom, harming their chances of being hired by other IT firms."

According to an analyst from a top IT consulting firm, close to 2,500 people from various topnotch companies are likely to be shown the door from January to March. "With the focus completely on profitability, bringing down the employee base is being viewed as the key approach to start with. Surprisingly, 25-30% of the number includes good performers and the balance are reasonable performers.

A source in Tata Group's IT company TCS, said that it's very typical of IT services companies to cut employee base especially when there is a project that's either completed or gone out of hand (for various reasons). "Companies either feel disinterested or see not much merit / returns on pursuing a particular type of services business projects as a result they will have a blanket lay-off irrespective of whether people being asked to leave include great/good performers or otherwise. And given that overall markets are not looking favourable, the Infosys possibility cannot be completely denied," said the source.

A senior Infosys source told dna that the downsizing may not be to that extent since the PPS unit is a very lean team as it is. " Even if they have to ask people to leave they will be given the option to join Infosys limited." That does not seem likely now.

Last month, Intel India president Kumud Srinivasan stated that the company was re-assigning roles from low-priority areas to high-priority areas. "We are getting to reduce our own head count, we generally see about 4% every year anyway. This is a bit of a stress over and above that," Srinivasan had said. She had even said that the company was looking at measures like voluntary retirement to achieve the target of an ideal headcount number. "We don't know what the impact on India will be. It is not going to be exceptional," she said while acknowledging that there would be a hiring freeze in the 2014 fiscal.

All said, fear and apprehension has overtaken the otherwise gung-ho IT sector in Bangalore.

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