Now, job cuts loom large

Meltdown effect: Companies weigh downsizing

MUMBAI: The country’s job market is about to come to a standstill with a freeze on hiring in the organised sector, a staffing services firm’s report released on Monday said.

India’s business outlook index has hit an all-time low, which means companies will not be recruiting people, said TeamLease Services in its latest employment outlook report for October-December 2008. “It’s like the calm before the storm,” says the logistics head of an IT services company in Hyderabad.

Eventually, companies may shed employees, though not in large numbers at once, as that carries the risk of a political backlash, as Jet Airways found out last week. Sajjan Jindal, president of the Associated Chambers of Commerce and Industry (Assocham) and vice-chairman and MD of JSW Steel Ltd, says: “India is a country where the policy of hire-and-fire cannot work (as it works in the US). There has to be a procedure.”
The TeamLease report mentions an 11-point dip in the employment outlook index to 64 points for the October-December quarter; the business outlook index for the same period is at an all-time low of 56 points.  

“The last quarter for this calendar year draws a grim overall outlook and continues to negate employment growth in India,” Sampath Shetty, vice-president, TeamLease Services, said.

Shetty said the banking, financial services, and insurance sector looks grimmer owing to the global meltdown, but there is a decrease in index points of all sectors.

On the information technology sector — a big employer so far — Ganesh Natarajan, chairman, National Association of Software and Services Companies (Nasscom), says: “Maybe six months down the line we will see more retrenchment if the situation remains the same. As of now it is not a big issue for IT companies. Such a trend can be seen only in smaller companies or companies in the wrong domain.”

Still, the Nasscom chairman says, the job requirement in the IT sector was estimated at 2,65,000 in the beginning of 2008 but has now been scaled down to 2,00,000.

According to the head of a multinational corporation’s development centre in Hyderabad, instructions have been received from headquarters in the US to freeze all kinds of intake of employees. “We have to get the maximum work done by the people on board for the time being,” he says.

The metros are the hardest hit with a decline in the employment outlook index points of Mumbai, Delhi, Bangalore, Chennai, Kolkata, and Ahmedabad. Only Hyderabad and Pune have seen a rise, the reason being an increase in hiring in the IT, retail, and financial services sectors there.

Interestingly, employees are getting used to talking about pink slips and not many are worried about losing their jobs. “Going by the experience of other countries, we feel the companies here would renegotiate pay packets, revising them downwards,” says T Shravya, a mid-level executive working for a leading IT company. “No company can afford a loss of talent, although firings may take place at the lower end of the pyramid.”

Not everyone is so sanguine though. Deepal Choksi, Gujarat zonal officer of HR India, says the meltdown has caused panic among employees of large companies. “Most are cutting senior positions and promoting juniors,” she says. “In the past month, we have received 20% more job applications while employer inquiries have declined by 15%.”

Most HR consultants say this is the trend worldwide. Deepak Mittal, director, High Heads management consultant, says, “It is not possible now to change jobs or go for higher salaries. In the last one and a half months, employers from the US and Europe haven’t asked for a single CV. But there is a 20% increase in CVs of job-seekers from the US and Europe.”

Another HR consultant, JP Gandhi, says most inquiries from companies are for junior positions.

But the lack of hiring does not mean HR consultants have no work. Many are busy sorting out CVs of not just fresh applicants but also experienced professionals. “Most of them are preparing for the storm that is bound to set in,” says R Chandrasekhar, a leading HR consultant in Hyderabad.