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10,000 IT jobs melt in one year

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The boom has gone bust before you could say hardware. Till recently, infotech companies including software developers and dot-coms provided the much needed succour to the country's unemployed and upwardly mobile alike. Not any longer.

The same companies are now handing out pink slips to their employees. Industry estimates suggest that around 10,000 people in the infotech sector have lost their jobs in the last one year, with the software services sector accounting for 80 per cent of the cuts.

The software sector is feeling the impact of the slowdown in key markets like the US. While many software professionals have been asked to leave, a large number of them have been benched. Though the bigger players in the sector like Tata Consultancy Services have gone to town talking about how they are still adding to their rolls, second and third rung players are either closing shop or laying off people.

Bangalore-based Savantech, a company which was into d-commerce (digital commerce is still waiting to happen), closed down its Indian operations and laid off all its 131 employees in two phases in January 2001 and May 2001.

Says a source who was closely involved in the laying off operation, "For the 21 employees who were laid off in January, we actually got them jobs, while the others were told that since the company was not likely to get a second round of funding it was better to close shop."

Even the bigger names in the business are feeling the heat. At the end of the quarter ended June 30, 2001, NIIT's knowledge workers (software professionals) numbered 2415 compared to 2582 an year ago, signifying a decline of about 6 per cent in the workforce.

Explains NIIT's chief executive Vijay Thadani: "We have not retrenched people per se, but have not been filling up vacancies (for software professionals) which have been falling vacant."

At Kale Consultants, several IT professionals working for its banking division were asked to leave. "After an appraisal, we lost 5 per cent of our people as they did not perform, but its not retrenchment. It is a regular exercise to ask non-performers to go," Vipul Jain, managing director of Kale Consultants, said.

Still other companies in the sector are paying the cost of their overseas parents deciding to downsize. Thus, Cisco, according to sources, has laid off about 150 personnel in its Bangalore development centre.

When contacted, the Cisco spokesperson said that the company had no comment to make about the layoffs. Cisco had decided to lay off about 8500 employees worldwide and the Indian toll is a part of this huge cut.

Similarly, Nortel Networks had closed down its R&D Lab in Delhi and had also laid off about 43 people working in that facility.

The dot-coms started their downsizing drive before the software services companies. Consider this: almost 75 per cent of the dot-coms that had come up have found it difficult to get their second round of funding.

Venture capitalists say that by the time it comes to the third round of funding, only 10 per cent of them will remain in operation. Exact numbers of the people who have lost their jobs in the process are not available, though experts say it runs into several thousands.

Thus, the Pradeep Kar-controlled Microland Group has laid off about 5 per cent of its 600 strong work force of group company Planetasia. Another group company, media2india.net, was merged with Euro-RSCG-promoted Media Turf and its chief executive Pankaj Sethi quit.

Yet another group company ITSpace.com, which was started off as a content company, has transformed itself into a marketing and events based company and laid off about 13 employees of its content team.

"At the peak we had 40 members in the content team but now we have only 7 left. Out of these 40, about 20 left because they saw it coming, while another 13 were laid off," a source said.

Indya.com, which was in the news recently for sacking 80 employees recently after splashing a high-decibel advertisement campaign last year, says the company resorted to 'rightsizing' as a part of its efforts to 'scale the operations according to market needs and remain profitable'.

The company has downsized to the extent of 35 per cent and its staff strength has come down to about 120 from 180, Indya.com chief executive Lulla said, adding that the company has no immediate plans for any further cuts.

"The internet is an evolving industry and business models are constantly tested. One needs to scale activities and resources as and when the situation so demands to stay competitive in the long run," Lulla added.

Another case in point is Hyderabad based web infrastructure development outfit Euclid which is now keen to transform and be seen as a software development firm.

Says Manoj Tiwari, head, India operations, "We consolidated our Bangalore and Delhi offices 10 months back and probably had to relieve about 8 personnel as they were unwilling to move to Hyderabad," Tiwari said.

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