Just seven months later, those criticisms seem like a bad joke. Recruitment consultants now say every one in 10 people employed in India’s banking and financial services and the information technology industry risks losing his job because of the global financial meltdown.
The situation has become worse after the collapse of Lehman Brothers and the sell-out of Merrill Lynch on Monday. At least three top recruiting firms in India say, in the last 24 hours, many companies have asked them to stop hiring.
Layoffs are still a highly emotive issue in India and no company is willing to put any number to the people being asked to ship out, but all of them are consistent about the fact that the annual performance reviews have become stricter this year.
Satyam, for example, has denied the buzz that about 9 per cent of its employees may be fired. But the company’s official statement says that as part of its appraisal process, the company identifies “around 5 per cent” of its employees for “performance improvement”. That’s a substantial number, considering the software giant has around 50,000 employees on its rolls.
Wipro isn’t far behind. The company has reportedly put 4 to 5 per cent of its employees under the non-performance scanner. The company’s official position is that some employees have been asked to move on, but the number is significantly lower than 2,000.
It’s certainly not IT companies alone. A host of broking firms admit that many of their employees are on “paid holidays” — a luxury they can ill-afford. And already quite a few of them have “politely persuaded” some of their people to leave. The numbers are still small, but the trickle may soon turn into a deluge if the panic in the markets continues for a few more months, Even the manufacturing sector, which has been largely untouched by the turmoil, may tighten the screws as far as hiring is concerned.
The instant fallout of what’s happening on Wall Street becomes clearer if one adds the uncertain fate of the over 2,500 Lehman employees in India and the estimated job loss of at least 1,000 Indian employees at Hewlett-Packard following the company’s decision to eliminate nearly 25,000 jobs worldwide.
That the future is bleak becomes clearer from the fact that US employers are expected to make their deepest cuts in staffing in almost seven years. Just a day after the Lehman and Merrill news broke out, New York Governor David Peterson forecast that Wall Street might lay off over 40,000 workers. To put this in context, Wall Street’s job force totalled 181,000 in July, already down by 11,000 from a year earlier.
HR consultants in India say the impact of what’s happening in London will complicate matters further and Indian employees are bound to feel the shock. For example, the layoff figure in UK’s financial district is expected to reach up to 50,000 over the next two years. The collapse of Lehman, which has a staff of 4,000 in London alone, adds to the misery of the financial services industry in that country. And that’s horrible news for companies dependent on Europe’s BFSI segment, that has added more jobs than all other service sectors combined since 2004.
Greg Savage, International CEO of Aquent, a US-based global staffing firm, says he was in London last week and wasn’t surprised when he got calls from some of the earlier hard-to-get professionals looking for a job.
Savage, whose firm specialises in marketing, communications and creative talent, says things are tough in India as well and companies will obviously get rid of mediocre employees as they can no longer afford to operate in a high-cost environment. Besides, some of the excesses of the past, when companies recruited anybody with a pair of hands, are bound to have its fall-out.
But the picture isn’t entirely grim for job seekers in India, Savage says. Employees with sought-after skills may still be able to demand hefty pay from potential employers. “In the media space, for example, employees who have retooled their digital skills, will have no problem in getting chased by head-hunters,” he says.
So things will pan out well for the creamy layer. But for the rest, the future is clear: prepare for more job losses. It’s that time when many may feel lucky to just have a job.