Gloom continues in India's IT sector: After Cognizant, Wipro, Tech Mahindra looks to lay off hundreds on 'performance' ground

As growth in India's $150-billion IT industry slows down, major firms in the sector are beginning to lay off hundreds of employees. After Infosys and Wipro, now IT firm Tech Mahindra could hand out pink slips to many of its employees as it looks to "weed out bottom performers".

Earlier in April, country's apex trade body ASSOCHAM had warned about industry's growth prospect and said: "Aggravated by rising rupee leading to lower realizations for software exports, the Indian IT firms may be forced to displace work force. In that case, the chances of layoffs are real."

At present, the sector is witnessing layoffs on a major scale for the first time since 2008-10 downturn. With a relatvely slow growth and firms looking forward to hire techies from the US, the future can hold more job cuts.

Also read: Big layoffs in India's IT sector: Techies protest sacking by Cognizant, seek govt intervention
 
At present, senior level employees with 10 to 20 years of experience are the most affected, but experts believe that later in the year, lower level staff too will be impacted. 

Also Read: Wipro lay-offs not surprising, more IT firms could rein in hiring: Here's why

Cognizant to cut jobs
Earlier this month, Cognizant Technology Solutions announced a voluntary separation package for its top executives - directors, associate VPs and senior VPs. The programme was a part of its plan to shift operations to automation and digital technology.

It was reported that at least 1,000 executives were expected to go. The company was expected to eventually cut at least 6,000 jobs, or 2.3 per cent of its total workforce.

Soon, Wipro joined the chorus. Reports surfaced of Wipro CEO Abid Ali Neemuchwala speaking in an internal conference call. He said that if revenues did not grow, around 10 per cent of employees would be asked to leave. His  statement caused more worry for many in the sector.

Tech Mahindra to "weed out" bottom performers
And now, Tech Mahindra -- which ranks fifth in the tally of Indian IT firms by revenues -- has begun its annual performance appraisal process. The company has hinted there could be layoffs.

"We have a process of weeding out bottom performers every year and this year is no different," Tech Mahindra said.

However, the Mumbai-based company, did not specify the number of employees that could be asked to leave but the industry sources suggested that the number would run into hundreds.

It is also to be noted that at the end of December 2016, the company had over 1.17 lakh employees.

Meanwhile, a forum of IT professionals has protested the move by Cognizant and called it "illegal termination" of employees. According to a report in NDTV, forum of IT Employees or FITE has sought immediate intervention in its petition submitted to Assistant Labour Commissioner Chennai.

 

Also read: After Cognizant, Wipro, now Infosys to lay off employees

To which the IT major responded by saying, "Cognizant has not conducted any layoffs. Each year, as is the best practice across our industry, we conduct performance review to ensure we have the right employee skill sets necessary to meet client needs and achieve our business goals. This process results in changes, including some employees transitioning out of the company. Any actions as the result of this process are performance-based and generally consistent with those we've made in previous years."

 

Infosys may ask job level 6 employees to leave
After Wipro and Cognizant, now Infosys, if reports are to be believed, has also joined in laying off the employees.

The TOI on Wednesday reported that at Infosys, nearly 1,000 employees in job level 6 and above - group project managers, project managers, senior architects and higher levels - may be asked to leave.

"Managers at these levels have been asked to identify, in terms of performance, the bottom 10 per cent of their reportees," the report said.

The development comes at a time when Indian IT firms are facing challenges in the business environment and stricter work permit regime in countries like the US, Singapore, Australia and New Zealand.

While the companies have termed these layoffs as part of normal business decisions, many believe these are directed more towards controlling costs.

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