Saturday, October 06, 2007

Rupee Appreciation calls for Human Value Appreciation

Diwali this year is unlikely to mean crackers for many Indian professionals - especially for
the ones pampered by the half yearly performance appraisals of late!
Some of the comments by experts:
-"The IT/ITeS players are hit by the double whammy of US subprime crisis and rupee appreciation. It has never been such a bleak scenario. "
- "Several companies are also cutting down their monthly recruitment drive by nearly 35-40%."
-"Indian IT firms that earn bulk of their revenue from global BFSI clients are expecting cost cutting moves internationally will have a trickle-down effect in India as well. A concerted effort will be taken to reduce wage bills by reducing mid-term salary hikes or rewarding a handful few"
-"The middle and senior management professionals have much a wider performance-linked incentive system and hence a smaller hike will translate into higher savings for the company. As a result, several senior people may look for newer jobs and the market is likely to be flooded with CVs"
Personally, we can feel many Indian companies have either frozen their hiring or reduced the pace of their hiring. This is primarily because of the 12-14% increase of costs in India than estimated at the beginning of the year. Clients no more look for people who are just tech savvy.
Praveen Pantula,a HR professional with rich recruiting expertise says " Companies would need to look for the value add a person brings on to the table in terms of the domain expertise or the business aptitude a person is having. You can’t afford to have developers, testers, SMEs separately. Companies are looking for people who have all the skills. A business aptitude at the top of all the skills will definitely be an added advantage."

"When your profit margins are shrinking, you cannot afford to make more number of lateral hires giving the advantage of higher salaries. In the coming years, one need not be surprised if the campus hiring percentages dominate lateral hiring. Even NASSCOM talks about trimming salaries in IT industry. If India has to remain as the capital of services, our Educational system has to strengthen the curriculum with Business relevant courses as well."
Boy, is it a wake up time for all of us??

4 comments:

ajay said...

Which sectors are going to do well in the near term? I read an article saying that retail, media will see an increase in hiring of around 11-12%. Is that true?

Joe Neitham said...

This only goes to proof the ill effect of over dependency on US market. On the other hand, I certainly feel that salaries payouts and expectations are unrealistic in some sectors, which in the long run defintely will be the downfall of the industry as a whole. We definitely do not need another recession or a dot com bust....my 2 cents worth

Anonymous said...

I already heard that some companies,"well known" are asking the freshers for whom they already offered, not to join, delay. Others have confirmed and rolled the offers yet and some have changed the pay packakge to the freshers and sent the resumes,ofcourse decresed. Layoffs are around the corner??

I am the King said...

Good and bad times are bound to happen not only in the life of an individual but also in a particular sector. For India the software exports and the BPO business have been the major contributors for the FDI and the flow of dollars in a steady stream which lifted the cash reserves of the country to new heights .

However as growth in one economy does not imply steady state to others , the sub-prime crisis coupled with lower spending levels of the US consumer have hit the US economy to some extent , which followed a steady appreciation of the rupee. The Rupee appreciated competing with the rise in the stock markets wit h a steady 3-4% Q-Q hike .The big 3 of IT took the brunt and we saw Infosys reporting drop and correcting its EPS this Q-2. However companies like TCS are doing great in terms of dollar revenue with their excellent hedging strategy.

There is one question which stands tall and dark at the career junction of all IT professionals and is questioning them big and loud ...” Are we moving to a recession? Will the wage hikes drop ? etc. etc .

Indian IT companies came out like diamonds from fire in various stages of trouble like the dot com bubble etc , I feel confident that it will be the same case for this also for the following reasons:

1. The cost incurred for getting a new client on the rolls of your company is 40% more than retaining an existing client and rendering him the best services , many companies have relaised this and hence they cannot afford losing clients which are existing . companies do know the value of employees who have helped to building a relation with the client and at the same time they are aware that if the salary hike does not meet the expectations then attrition is bound to increase and any day a resource manager knows that a person with experience is no replacement for a fresher in spite of being through the most rigorous training procedures.
2. Lack of trained and skilled graduates. Though we claim to have the largest pool of English speaking graduates, a project manager knows the standard of an engineer who passed out fresh today. The Industry leaders have themselves have a clouded forehead and they say that 80% of the resources cannot be employed. Hence scarcity is here to stay !
3. Diversity and Global workforce is the new mantra of the IT giants. Gone are the days where you will have a person from India working with you here in your cubicle , Philippines, China , Asia Pacific have large pool of resources and I know for sure that the Recruitment staff of these companies would be more than willing to go there to hire rather than going to a local engineering college . Hence the amount which is saved in hiring a graduate from Philippines who would come at a lower wage would help the C&B team to cater to the demands of the experienced coo.
4. Large cash reserves help companies like Infosys cater to such exchange rate fluctuations and average out the fluctuations with ease. Mergers and acquisitions would help in ramping up with ease and also expand the most important Geographical spread in Europe and other regions which will allay the fear of the rising rupee



Hence a strong urge and need for the companies to maintain a service- profit chain , the policies of the government in mobilizing resources and giving the infrastructure edge to tier –II towns along with reduction in processing time of passports, visas and work permits should enable the Indian IT to grow hale healthy even without the proteins of tax holidays .

At a micro level , imagine less number of people on bench , people and managers becoming more performance and merit oriented and above all people will start appreciating innovation, smart work and efficiency than staying late, process orientation .

We have challenge in our hands its up us to grab it with both out hands stand the desert storm with sheer grit performance and maturity to enjoy the palm shades and the oasis in the near future ..