Bibhu Ranjan Mishra & Ravi Menon / Bangalore Apr 03, 2009, 00:28 IST
IT major HCL Technologies has decided to mitigate pressures on operating margins by freezing salary increments through 2009-10.
The company has told its employees that there won’t be wage hikes for the financial year ending July 31, 2009, due to tight demand in the US and Europe, declining volumes, and the need to further tighten expenses across business divisions.
In a harsher step, the company has slashed retainer bonus, which averages 10 per cent of an employee’s salary, from April 1. Travel allowance has been sharply reduced, if not curbed, in most cases. “HCL is discouraging travel requests, except in exceptional cases related to onsite employees. The option for an employee to use his travel allowance has been minimised,” said an HCL employee.
An HCL spokesperson said the recent communication with employees was part of a routine process under which the leadership of the company reached out to employees across the organisation to take stock of the current business environment, changing customer requirements and to together arrive at a comprehensive strategy.
“With increased focus on delivery excellence and operational efficiency, the strategy will enable the organisation to find opportunities in the current environment and carry forward the growth momentum,” said the spokesperson.
The company is also said to be looking at suspending matching contributions to employee retirement plans. Onsite allowances have also been slashed, though the exact quantum in this case is not clear.
Chief Executive Vineet Nayar is known to have met employees of the Chennai office recently, where these cost-cutting measures were spelt out. It is learnt that while the company has not gone for salary cuts at this point in time, a 25 per cent salary cut for employees on the bench has been considered. “Salary cuts were considered, but were not carried out. Instead, employees are now being charged for frills like coffee and refreshments,” said a source.
In January, HCL had said that it would reduce about 280 jobs, or 8 per cent of its global workforce, and implement other cost-cutting measures. The company is learnt to have laid off about 450 people from its British Telecom practice. Redeploying bench resources, which constitute roughly 20 per cent of HCL’s workforce, continues to be a challenging prospect for the company.
Many employees on the bench have been given up to two chances for redeployment on a new project, failing which they have been given the option to leave, sources say, adding that each fresher is being given up to two client interviews.
Besides shrinking IT spends in its key markets of North America and Europe, HCL’s acquisitions of Liberata Financial Services and Control Point Solutions ($20.8 million) last year are believed to have affected its EBITDA margins — which grew 1.1 per cent to 22.5 per cent on a year-on-year basis during the second quarter ending December 31 last year. To add to HCL’s woes, its forex losses owing to the depreciation of the rupee in Q3 of the 2009 fiscal expanded to $207 million from $156 million a year earlier.
While the IT major won big-ticket outsourcing deals totalling $1 billion in Q3, it has decided to strengthen its flagship tech services division by roping in senior executives from its 13,000-strong BPO division.
HCL BPO’s key clients in the UK and Ireland include Axa BPO (acquired by Swiss Re last year) and Barclays Bank.
I think it is important to understand that every organisation is looking to streamline its processes and focus on delivery and increasing efficiency. HCL is doing just the same. I joined HCL 8 months ago and I can tell from experience that my company has been one of the last of companies to take such stands. AT least, the management has the guts to communicate openly to all employees instead of the employees getting to see the change in their salary. I definitely appreciate that.
Posted by: Chirag
July 03 , 2009, 10:44 IST
When will HCL would send the joining date for 2009 passout in chennai.
Posted by: soundararajan
April 08 , 2009, 14:45 IST
1. HCL proves its not an exception to the Indian Service industry.
2. I don't understand if resource cut down is the only means to streamline their expenditure. If so, then the Cheif management does'nt need to be an MBA or any experienced person. Any one in the world can manage finance for a company by simply cutting down resources. :|
I think current economic conditions have put every thing on HOLD so whether its consumer spending or corporate spending. The present situation demands streamlining of your ways of working and increase efficiency.
While some companies are doing it unilaterally by imposing such restrictions on their employees, I really appreciate HCL's efforts where our leadership reaches out to employees to discuss the current situation and together arrive at a comprehensive strategy.
HCL is one of the best companies that I have worked in and really appreciate the transparent culture and enabling environment that people get at HCL.
The environment is bad everywhere so it is not fair to blame one organization for its actions. What HCL has done is for collective good of all employees and the organization. The atmosphere is such that some might get affected but that is purely only out of the lack of choice and not any intentional effort by the organization. You may feel I am talking favouring HCL, but I am talking from my experience. Even I had up to the pressure of cost cutting measures but I know that HCL was one of the last IT companies to resort to cost cutting measures and salary structuring. So, let's not make it seem all so bad. It is the time where instead of panicking, see more deeply into why certain things are happening and in what context and support our organization, rather go all out complaining about it. It's a phase and it will get over!
Bravo Mr. CEO - BRAVO....
This is only thing that can be said to the management- THE LIARS.
Last year they said with Chest thumping that 'We have increased our revenues by 35% without increasing the headcount , that means every employee had to work atleast 35% more than usual- but when it comes to the increament they gave avg 15% so the rest 20% is pockted by THE LIARS.But, The BRAVE VINIT NAYAR took a fat increament and also got promoted to CEO from President.
This is the company that never gives a single paisa outside the CTC..
I will be delighted to hear that Mr. CEO (rides Maecedes S-Class,Ferrari and dances with Bolywood actresses during Global Client Meets and that too is paid from Company earnings) has taken a substancial pay cut to save the juniors....
But I am sure that day will never come as Management of this Company is GREEDY and they only know how to fool and suck the blood of the innocent juniors.....
They are fooling the entire world with employee first claims!!
They have gone for flat 25 % Salary cut, reduction in travel allowances etc.
They are making employees travel by train and in some cases not even reimbursing travel expenses.
The 2 so called deployment chances are BPO opportunities for HCLT Business line employees, which is just another way of saying Good Bye!!
Kudos to Management Guru, Vineet, for yet again, finding a new way of fooling around by creating this so called "Smart league" wherein, people are expected to be flexible enough to take BPO roles, even though they may be champions of there technologies and past projects!
It's really unfortunate to for all HCL employees that they will be loosing their money.
1. This proves HCL "Employee First" as a total gimmick.
2. HCL do not care for employee. When the time came employee (bread earners for the company) at engineering level has to pay the price. Management people are least affected.
3. HCL had spent huge money in so called "branding HCL" which was missing couple of years back. All hard earned money wasted by the management. None evaluate the benefit and do not care only show off. Now mangement is crying when profit margin slides down.
4. There is nothing bad/wrong saying "Customer First" which shows accountability. "Employee First" shows "Don't care" attitude towards Customers.
Posted by: BhuktBhogi
April 03 , 2009, 16:39 IST
1. HCL does not apply the same rules to its employees across the levels
2. Sr Management and people responsible for supporting the business line are not affected by these decision
3. As suggested by KKomments it only applicable to the people who not only earn the revenue for HCL but all the time make management look bright and intelligent by putting in their free and overtime in doing activities (read presales) that they were never hiered for
4. these policies are not implemented across the classes of employees. there are people who have got raises and promotions (up to 30%)
5. Net net disappointing
Posted by: :(
April 03 , 2009, 14:32 IST
i agree with you fully...
how HCL is trying to save its image and still manage to retain its margins...
When will they give joining dates to freshers of 2008 batch still waiting to join HCL.
Posted by: JM
April 07 , 2009, 10:00 IST
As per my opinion you should not wait for HCL offer latter. If you want to work around your core technology HCL is not the right place for you.
Posted by: Jasneet
April 03 , 2009, 18:04 IST
smiti, HCLT has already started firing employees of 2008 freshers batch...don't expect HCL will entertain wait list! if you have offer from some other company try there!
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