With the Indian units of multinational corporations becoming significant in scale and size, the 'offshore employees' working out of this 'cheap destination' are now equally prone to pink slips as those sitting on-site and at higher costs.
According to experts, the Indian units of most multinational firms function like subsidiaries with independent profit and loss accounts, exposing them to any positive or negative developments that take place at the company's headquraters.
“India is no longer a cost-centre for large multinationals; most companies' Indian units have their own P&L accounts and thus they will also be impacted by any global decisions,” said Anurag Gupta, COO at Hyderabad-based IT staffing company Magna Infotech. “We want to move up the value chain and become partners in businesses, so we must accept this reality.”
The reality did hit India's silicon valley on Wednesday, when technology giant IBM asked several employees at its hardware business in Bangalore to quit. The move is part of the company's 'global workforce-rebalancing' efforts, for which India seems to have been chosen as the first destination. Even as the total number of employees impacted could not be confirmed, sources said it could be anywhere around 50-70. Some sources even said that the retrenchment activity may be carried our in phases until Friday.
“Earlier a lot of companies hired in huge numbers for labour arbitrage and people felt that nothing of this sort (firing) will happen to them. But offshore footprint of several companies is much larger than what they started off with. For those whose offshore centres are also as developed as their main centres they will have repercussions if globally the company is making changes,” said Moorthy Uppaluri, CEO Randstad India. While he did not comment on IBM layoffs he did agree that offshore centres are no more averse to pink slips.
IBM is not the first MNC that has taken such measures in India.
In January, after multinational semiconductor chip maker Intel Corp announced a decision to reduce its global headcount by 5%, Intel India President Kumud Srinivasan had said “the impact on Indian operations would be the same as other geographies”. Even as Intel, which currently has about 4,500 employees in India, does not plan to retrench any staff, it has clearly said that it is not looking at any hiring in the country in the 'foreseeable future'.
“Pink slips have been a reality in India for some time now, especially ever since the slowdown in 2008-09. It may not have been large-scale and happened with discretion, but companies are not holding back in undertaking such steps only because of cheap labour,” said Shreya Bajaj, general manager-international search at talent hunting and consultant firm Maple Code.
The official site for IBM employees' union said, in 2014, the company is set to spend $1 billion to eliminate an estimated 15,000 jobs worldwide across verticals, including hardware and software. Since the company has around 35% of its total workforce in India, experts say this could mean the company my cut upto 2,500 jobs here.
However, according to Kris Lakshmikanth, CEO & Chairman of executive search firm HeadHunters India, IBM may not fire so many employees in India because it will need Indian workforce if it wants compete with the domestic majors like Tata Consultancy Services and Infosys, IBM. “Even if they want to fire any further, it will happen in a staggered way over a few months, not just at once,” Lakshmikanth said.
Meanwhile, even amid expectations that IBM would fire more employees in India, most of those who were given pink slips on Wednesday chose to stay quite about the issue.
An employee who lost his job yesterday and did not wish to be identified, said, “I am now focused on finding another job. I don't want to get into any fight with the company's management because their decision is not going to change and I don't want to do anything foolish that leads me to getting blacklisted.” While most IBM employees refused to speak to the media (according to sources they were warned by the company against this), those who did, sounded confused and unsure for what lay ahead.
“The job market is good so those who have been sacked are not much bothered to take any action,” said Karthik Shekhar, general secretary of UNITES, an international group representing software professionals. “IBM will not see any protest against what has happened because professionals run the risk of getting blacklisted and no one would want to take a chance.”