IT companies dismiss fears of large-scale job cuts

Some of the leading IT and IT-enabled services companies have ruled out any major retrenchment plan anytime now. Most of them are also preparing to go ahead with their campus placement programmes this summer.

“Too much is being read into performance-linked bonuses, and counselling out of relative underperformers. For years, this has been happening in all knowledge-based industries. The percentage of those counselled out based on performance is usually in very low single digit. Progressive companies provide all support during the Performance Improvement Plan period to help individuals measure up, and also make significant investments in additional learning interventions,” says T. Sridhar, Chief People Officer, Cognizant.

Echoing this view, sources in Nasscom say that given the current global trends and the highly competitive environment, the IT and ITES companies, especially BPOs, have to take a hard look at quality and productivity.

“Perhaps, they have gone in for large-scale recruitment over the past couple of years, taking in graduates who do not measure up to the standards. The dip in profitability could account for the reduction in performance-linked bonuses, but the weeding out of underperformers is not only a continuing exercise but also an imperative one right now,” according to a senior official.

A senior HR manager in a leading IT major says people are their assets and it makes no sense for companies to lay off or retrench staff already on their rolls. “In an industry where attrition rates are already high, why will a company unnecessarily send out qualified hands?”

Mr. Sridhar emphasises that there is absolutely no link between the pay or job cuts and the appreciating rupee. “Companies have many levers to tackle the appreciating rupee including improving employee utilisation, better managing onsite-offshore mix, improving pricing from customers, moving up the value chain, and structuring deals based on business outcome rather than per-person effort.”

Most of the IT companies spoken to insist that they will go ahead with their campus placement programmes. HR managers also argue that retention is preferable to fresh recruitment, but the projected demands for the future still remain valid. However, their financial counterparts feel that given the slowdown or virtual recession in the U.S., there will have to be a constant review of projects and staffing patterns. The trend is obviously towards “capacity utilisation and productivity.”