Saturday, March 15, 2008

Dollar Bleeds Indian IT - BPO Industry

The Indian success story in ITES was, according to me, a major factor that boosted the confidence levels of Indian business captains. The revenues of IT companies, their liberal HR policies were talk of the nation for a long time. But this is going to change - if the US Dollar downfall continue. Lot of my engineering batchmates were employed in biggies like Infosys and Wipro, and were paid hefty pay-packages for doing nothing. I came to know later that it is a common practice in IT companies whereby they inflate their manpower strength and win contracts. These people were called benchers. Literally, many of them do not have a permanent place to sit in the company premises. But this is going to change now. Not that they will be having permanent place to sit; These benchers will not exist now on, thanx to weakening grip of US Dollar. Indian software firms mostly depend upon US software exports and US Dollar weakening means that the value of exports to US and hence the profits are going to suffer. First blood in this gloom will be of the benchers. read this Times of India story -
It looks like many more technology professionals and BPO executives are going to be pink-slipped this year. Companies normally ask around 10% of their bottom-level performers to quit after appraisals every year. But this year, the rupee appreciation and the widely expected US recession are likely to push this number up to 20%-25%.

Several providers are being told by their clients overseas to cut employee-cost, which has increased by 15% to 20% in the last 18 months. Enterprises are also being pushed to cut drastically or eliminate their bench-sitters. In other words, the industry is clearly heading towards a forced-attrition regime.

''You can't actually term it as downsizing. It will be an overall rationalization exercise, wherein we will also get rid of benches. Every corporate action is dictated by market dynamics,'' said the president (HR) of a leading IT firm.

Global banks have been writing-off billions of dollars due to the sub-prime crisis. Other clients have started cutting or cancelling contracts. Consequently, domestic IT providers are already tightening their belts. Expenditure towards travel, employee entertainment including outing and dinners, birthday/wedding anniversary gifts/vouchers, reward programmes, free holidays and phone calls have already come under the scanner.
More pink-slips for techies this year-India Business-Business-The Times of India

Another great coverage about US Dollar downfall comes from Reuters. Read it here.
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