The Hindu : Karnataka / Bangalore News : IT companies tighten purse strings to cut costs

Online edition of India's National Newspaper
Friday, Nov 02, 2007
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Karnataka

Karnataka - Bangalore

IT companies tighten purse strings to cut costs

Anjali Prayag

Several options on the board to tide over rising rupee

Annual pay hikes could see a dip of
12-15 per cent in April 2008
Companies are also considering hiring
part-time talent

Bangalore: Indian information technology companies, hit by the spiralling rupee, are cutting costs across the board. Companies are considering controlling wage costs, salary being one of the highest expenses for an IT services firm. But drastic cuts in recruitment will not be possible as there is still a steady flow of business, said IT human resource managers. “There is a strong move towards cost utilisation to offset the 8-9 per cent rupee rise impact,” said Pallab Bandyopadhyay, Chief People Officer, Cambridge Solutions.

Reductions

Companies are therefore proactively reducing bench strength (by almost 20 per cent), reducing recruitment costs incurred in brand building exercises, and are using video conferencing instead of flying in prospective candidates. They are even delaying joining date for campus hires. “There could be a drastic cut in the annual increments this year,” said Nirupama V.G., Managing Director, Ad Astra Consultants, a Bangalore-based recruitment firm.

Annual pay hikes, which hovered around 20-25 per cent, could be in the region of 12-15 per cent in April 2008, she predicted.

Campus recruits faced delays in getting joining dates this year, said Rishi Das, CEO, Campus Connect, a firm that helps build relationships between tech colleges and IT firms.

Delay in hiring

Hit by the rising rupee, several IT companies decided to utilise their benches completely before taking in fresh recruits. “But now, most campus recruits have either been absorbed or have been given a joining date to campus hires, though there was a delay of three to four months,” said Mr. Das. ‘Just in time’ hiring is one of the ways IT firms are battling the strengthening rupee and the rising wage costs. Companies are also considering hiring part-time talent during peak periods and a couple of companies have approached Ad Astra for contract employment, according to Ms. Nirupama.

Other options

Hiring is just one aspect where costs can be cut. Other options being experimented with are longer working hours and cutting other cost areas such as foreign travel, F&B bills, offsite meetings and advertising. Elango R., chief of Human Resources, MphasiS, EDS, said companies that were callous in spending will now bring in efficiency and this could temper some of the irrational exuberance in wage increases.

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