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Covid-19 impact: 10,000 IT professionals may have lost jobs in Q1

By Debasis Mohapatra
July 13, 2020 11:15 IST
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The appraisals being done by most companies this year are harsher than past ones with higher threshold in many metrics.

Reduction in headcount has been done across most tier-I and tier-II IT firms along with global technology firms in the country.

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Illustration: Dominic Xavier/Rediff.com

Indian IT services firms are learnt to have implemented rigorous employee performance evaluation metrics as most of them are resorting to staff retrenchment to withstand the difficult business environment in the wake of the Covid-19 pandemic.

According to industry insiders, at least 10,000 software professionals in the country might have already lost their jobs in the April-June quarter, while more are expected to lose their jobs in the coming quarters.

 

The April-June quarter is traditionally the appraisal period at IT firms when they conduct performance-based evaluations.

Besides, rising pool of reserved employees - called as bench in the industry parlance - owing to delay in new projects and cancellations in some instances has also added to the woes of the domestic IT firms.

“Top 10 IT firms of India reduced their total headcount by around one percentage point in the last quarter, which could be pegged around 10,000.

"This number is not higher as compared to last year, though people on bench have increased substantially.

"If the situation does not improve, there is a fear of higher number of lay-offs,” said a senior industry source, requesting anonymity.

Reduction in headcount, the person added, has been done across most tier-I and tier-II IT firms along with global technology firms in the country.

“Every large company is doing it and there is no exception.”

Maintaining people in reserve (without assigning them in any project) is a necessary aspect of the industry as companies win contracts from clients by showing them that they have enough readily deployable resources to execute those projects.

Typically, tier-I IT firms maintain around 7 per cent of total staffers on the bench.

However, this has gone up by one percentage point in the last four months owing to the pandemic.

Higher number of people without billable projects leads to lower employee utilisation ratios, putting pressure on operating margins.

Recently, some employee unions alleged that Cognizant Technology Solutions is planning to lay off large number of employees after deliberating giving bad rating in the appraisal process.

The company has denied such allegation saying “performance management is a normal process” for the industry including Cognizant.

Similarly, IBM reportedly laid off some employees in India as part of its global employee pyramid optimisation.

Not only global IT firms, even the top management of domestic companies including Tata Consultancy Services, Infosys, Wipro have commented on involuntary attrition as part of appraisal methods.

However, many in the industry said the appraisals being done by most companies this year are harsher than past ones with higher threshold in many metrics.

“In work from home environment, productivity tools have been deployed to gauge how much time employees are sitting in front of their computers.

"Employees are being asked to log in beyond their working hours.

"Ratings are deliberately being downgraded despite good performance,” said Elavarasan Raja, founding member of Forum for IT Employees, an employee union for IT staffers.

Sources said some big IT firms have reduced their benching period (the time till the employee can stay without a project) to 45 days from usual 60-90 days period.

“Employers are not ready to give a long rope to staffers in the bench, which used to be the case earlier.

"As new projects are scant in supply, even task completion timelines are also being strictly enforced,” said a senior HR analyst working with a global staffing firm.

As companies let go off employees in the bench with no fresh hiring, most IT firms are likely to report reduction in headcount in the first quarter, a sign of things that will come if demand environment doesn’t improve in coming quarters.

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Debasis Mohapatra in Bengaluru
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