Axe effect
Towards end-May Keane Inc. was in the news when the Wall Street Journal wrote about the company’s innovative recruitment practices in India—how it goes to great lengths to win over even the parents of new recruits by inviting them to attend orientation programmes.
Media reports say that as many as 400 people have got the sack, though insiders peg the number at around 150, or 1 per cent of its global workforce. Company officials had little to say to Business Today, except this: “Keane is com-mitted to building a nimble and exceptionally high-performing workforce—where performance is differentiated. The recent workforce rationalisation in our BPO and IT service businesses is related to further integration and aims to strengthen and position us for stronger growth.’’
Head honchos of Indian IT services firms have been surprised by the Keane reaction. Says Arun Jain, Chairman & CEO, Polaris Software Lab: “Indian companies usually try out a softer approach, and employees are given enough time and notice to shape up.” Some like TCS also try to work out alternative placements.
The US recession, it appears, is not helping matters for a mid-sized player like Keane. Says Arup Roy, Senior Research Analyst, Gartner: “While offshore outsourcing is increasing, sourcing opportunities are changing. Vendors who do not show value-add or differentiation by demonstrating industry expertise, proven track record, process excellence, depth/breadth of service offerings and ability to take risks are likely to be less competitive. Smaller vendors should look for their sweet spot in terms of the type of deals they chase. Overall, they should come to the table with some niche and not just be generalist in order to compete effectively and generate sufficient profits to sustain and grow.”
Moreover, the company is in the process of consolidation after Caritor, a California-based company run by Mani Subramanian and having an offshore base in India, took over Keane Inc. 16 months ago. The $885-million Keane then was under severe pressure from its customers to create a global delivery model; that prompted it to merge itself with the smaller and lesserknown $120-million Caritor to create a $1-billion entity that retained the name of Keane Inc. The merger gave the entity a critical size and an offshore base in India.
Says Polaris’ Jain, who’s no stranger to consolidation himself (a Citigroup company called Orbitech had merged with Polaris in 2002 when both companies were of equal size): “Merger pangs in general take at least three years to settle down. The process calls for tremendous internal communications, communications with the customer, respect between the two companies for each other’s competencies, good conflict management in areas where businesses overlap and patience.” Can Keane demonstrate this?
—Nitya Varadarajan
