The Hindu : Karnataka / Bangalore News : The IT bandwagon is slowing down

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Wednesday, Jul 09, 2008
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Karnataka

Karnataka - Bangalore

The IT bandwagon is slowing down

V. Sridhar

There are indications that tech companies dependent on the U.S. are tightening their belt

The IT industry employs about seven lakh people in the city
Main stimulus for slowdown coming from the U.S. markets

— Photo: Shaju John

Tough times: Entities which have a greater exposure to customers dealing in financial services in the U.S. markets are in more trouble.

Bangalore: Bangalore, which for a decade has basked in the glory of its status as the country’s information technology capital, now braces itself for a turbulent and uncertain future. Although definite numbers indicative of a slowdown are only expected to trickle in the next few weeks as companies declare their results for the quarter ending June 2008, there is an air of expectancy in the IT campuses that dot the city’s landscape.

It is not as if job losses are round the corner in the industry which employs about five lakh to seven lakh persons in the city. The prospect of being thrown out of employment is only one extreme possibility. There are other ways in which employees are feeling the pinch. A senior executive in a large-sized IT company, which employees about 20,000 employees in the city, said about 5 per cent of the “employee population is being targeted.”

Termed chronically non-billed cases — CNBC in short — these employees are not working on the projects they were hired to work on, for reasons not of their choosing. The projects that the company expected to materialise at the time they were hired have simply not materialised. Last year, the appraisals of employee performance in the company were completed by July and took effect in August. The source said the exercise has not even been initiated. In effect, appraisals will be delayed and will take effect much later, which has led to a lot of heartburn among employees.

Cutting bench strength

This human resources (HR) executive of the IT major, whose stock is a bellwether of the IT industry, said outright job losses are not the only worrying factor. The pressure to reduce “bench strength” has not only increased the workload, it has also antagonised the workforce. For instance, the emphasis on “multi-tasking” now means that those who were used to working on different verticals — for example aerospace-related outsourcing and automobile industry related outsourcing — now have to work across the verticals depending on which project needs to be finished earlier. “The intensification of work in general, and the de-skilling that is perceived to be associated with it in particular, has antagonised employees,” says this executive.

U.S. slowdown

Rostow Ravanan, Chief Financial Officer, MindTree Consulting, says “anecdotal evidence, from market news, friends abroad and from colleagues and peers from the industry suggests that there is great pressure to cut costs.”

Although he feels that not everybody in the industry is immediately at risk, he warns that “entities which have a greater exposure to customers dealing in financial services in the U.S. markets are in more trouble.” He also says that companies with a larger scale of operations are better prepared “to ride out the storm” compared to smaller ones. The main stimulus for the slowdown is coming from the U.S. markets, he feels.

Says Mr. Ravanan: “Psychologically, people in the organisations in the U.S. have no clear idea of the future, either for themselves or for their organisations. They are retreating into a shell. This will obviously delay new projects for Indian companies.”

Mr. Ravanan says the “tremendous uncertainty about the future will put pressures on budgets” and that new projects will not be “ramped up”. There is pressure to move contracts from U.S. vendors to Indian vendors; there is also pressure to move jobs done by Indian vendors onsite in the U.S. to offshore locations like India. It will be very difficult for new vendors to get business from these accounts.

Tight budgets

Anuradha Sharma, who used to head HR in a prominent IT company in Bangalore and who now heads an HR consultancy, says: “There were a lot of people who were used to the frills at the workplace like seven different cuisines in the company cafeteria.” She points out that the slowdown is not merely going to affect those who may lose their jobs but also those who stay back in companies. “They have to re-jig their expectations from their work environment. Budgets, except in the core areas, are going to be difficult to get,” she adds. She points to the fact that recruitments, “which are a public indicator of the health of a company, are being staggered in many companies.”

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