Ravi Menon / Chennai/ Bangalore Mar 02, 2009, 00:10 IST
Technology giant Hewlett-Packard’s move to slash employee compensation and benefits across geographies in lieu of job cuts will not affect an estimated 3,000-plus employees of the erstwhile Electronic Data Systems Corp (EDS) who were moved to EDS subsidiary MphasiS after the former was acquired and merged with HP last year. However, a good number of former EDS India employees who were transferred to HP India will not be so lucky, industry sources said.
“The pay cuts at Hewlett-Packard worldwide will not be applicable to MphasiS employees or former EDS employees now with MphasiS, even though the merger of MphasiS with HP-controlled EDS is long complete.
Of course, HP CEO Mark Hurd’s plan to effect pay cuts, between 2.5 per cent and 5 per cent, will affect all EDS employees who were moved to HP. Only the 3,000 or so EDS employees who were moved to MphasiS’ rolls last year will escape the salary cut on HP’s account,” an industry source added.
HP employs an estimated 60,000 people in India, including former employees of EDS which it had acquired for $13.2 billion in May last year.
HP’s ADM services division, which handled a large number of inhouse projects for the company till the merger with EDS happened last year has been strengthened considerably by the merger and subsequent knowledge exchange with EDS’ consulting teams, sources said, adding that this has also lead to duplication of roles.
“The issue of duplication of roles in certain positions like consultant and project lead is something HP is reviewing seriously, though no firm decision has been taken on how to tackle this at the employee level,” a source said.
After missing its first quarter earnings expectations, HP had announced worldwide cuts in compensation and benefits at its earnings call on February 18. CEO Mark Hurd’s salary is set to be reduced by 20 per cent, executive council members’ base pay by 15 per cent, while other executives will be subject to a pay cut of 10 per cent, HP said in a letter to its employees. Most employees will see pay cuts between 2.5 per cent and 5 per cent depending on their job levels.
HP’s net profit for the first quarter to the end of January fell to $1.85 billion from $2.13 billion a year earlier.
Revenues for the quarter posted the slowest growth of all time, rising 1 per cent to $28.8 billion.
HP has forecast revenue decline of 2-5 per cent from $118.4 billion posted in fiscal 2008. The company has cut its profit outlook for the year on the back of its printers, personal computers and server divisions posting lower-than-expected sales in the first quarter and expectations of cutbacks in tech spending on computer services and software.
Global giants in India like IBM, which held a 10.8 per cent share of the Indian tech services market in 2008, Accenture and Oracle have not given any indications of slashing base salaries of their employees. Wipro employees have expressed apprehensions of firings and 5-15 per cent cuts in variable pay, while Infosys has indicated its intentions to slash variable pay at the executive and a few senior level positions.
MphasiS is primarily based outside of the U.S. Not sure what kinds of labor laws are in place for India (and other non-U.S. countries for that matter) but it doesn't appear that any of the non-U.S. employees have received a pay decrease yet. Even the additional 10% paycut announced Fri. Mar. 13 for HP-EDS employees stated that it was only for U.S. and Puerto Rico employees. It looks like HP has to get non-U.S. workers to agree to take the cut as noted in the link:
http://www.theregister.co.uk/2009/02/20/hp_pay_cuts_europe_not_compulsory/
"EMEA employees are required by law to give their individual written consent before any salary deduction can be imposed upon them."
With this being the case, it would seem that if other countries would not allow a company to just force paycuts on their citizens, that U.S. workers may have a case in a court of law about unfair labor practices as they did not have a choice and are the only area of HP which are receiving cuts.
It's disgusting what they are doing to us. It makes it hard to focus on your client account, who by the way are still paying the same contracted price to EDS and expect the same level of service, when the company that writes your check treats you this way. Aside from coming up short based on the initial pay cut, not seeing a raise since i started 3 years ago I now have to figure out how to support my family on the latest shafting. Looks like I will be working from home more often then heading to the office as my commute is over an hour away to my current client.
I find this very interesting as it shows how EDS has made another bad decision.. At least with Dick Brown you knew what to expect..
EDS went into this venture with HP and now HP is loosing sales and EDS takes the hit.. Wow..
Heck EDS made a profit before being taken over and now the employees will suffer. As current employee on a great contract the customers will be the ones to loose.. The moral at EDS is low with the 20000 job cuts and then the 5% cut now 10% and most of the workers have not seen a raise in the last 5 Years.
Time to leave and most likely everyone will be sick a lot more.. So they cut my pay 15% I'm out sick for 15%.of the time...
"Mark Hurd's salary is set to be reduced by 20 per cent"
Let's find out what that really means: HP gave Mark Hurd $25.4 million in cash last year, including a $1.45 million base salary plus $23.9 million in bonus money. Plus stock awards worth $7.9 million, $738,392 for "miscellaneous items", including $98,000 dividends paid on his
restricted stock holdings and $71,482 of relocation compensation. The total amount of pure money he cashed in 2008 is $42,5 million US dollars. And personal and home security $256,000 plus personal use of HP's corporate jet $135,734... And now he wants his employees to cut 5% of their base pay without even guaranteeing their jobs? He offered to cut 20% of his base pay, which is $1,450,000 so 20% of that is $290,000 which is only 0.6% of his total income, not 20%.
How can he sleep at night he is taking a 20% salary cut. What some people don't know is that CEOS live off of their stock & Bonuses. Take away those an let him live off of what the average employee makes and I can promise you he would not be able to do it
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