Source: Economic Times

IT services may see over one lakh layoffs by September: Experts
27 Apr 2009, 1506 hrs IST, PTI




NEW DELHI: The Indian IT services sector may see up to five per cent layoffs -- amounting to more than one lakh job cuts -- over the next six months


as companies focus more on cost-cutting due to persisting weakness in global demand, experts say.

Companies may reduce workforce in this fiscal, mostly based on stringent performance criteria, experts added.

"We expect the knowledge industry (IT) to see 3-5 per cent non-voluntary exits in the first two quarters of the financial year mainly in senior and middle levels," Deloitte Touche Tohmatsu Senior Director (Management Consultancy Services) P Thiruvengadam told PTI.

Given the fact that more than 22 lakh people in the IT industry, five per cent non-voluntary exits would mean more than one lakh employees being shown the door by September.


Nasscom estimates more than 22 lakh people were working in the Indian IT-BPO sector in FY2009 (till February), while indirect job creation is estimated at about eight million.

International Institute (IMI) Director C S Venkata Ratnam said, "The IT sector is better off but it may see up to 4-5 per cent job losses in the first two quarters of this fiscal."

The global financial turmoil has also hit the country's other export-related sectors including textiles and some unorganised industries like auto ancillaries, Venkata Ratnam said.

Besides, IT services (including engineering services, R&D, products) exports, BPO exports and the domestic IT industry provide direct employment to 9,47,000, 7,90,000 and 5,00,000 people, respectively, Nasscom says.

The next 5-6 months would be critical for companies in deciding on job cuts. At present, layoffs are very few and more companies have frozen hiring to tackle the economic slowdown, Thiruvengadam said.

Last week, third-largest exporter Wipro said it would freeze salary hikes and is uncertain about campus recruitment.

Further, as per government data, over one lakh people lost jobs in the export sector due to the global downturn.

Asked about what strategy they are advising, experts said adopting a wait-and-watch policy and a mature outlook would be the best policy.

"If professionals aim towards multi-skilling and put in extra efforts to dabble in other areas of work as well, they stand a chance of becoming indispensable to their companies," Thiruvengadam

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All these will further lead to less demand in RE and lesser and lesser rentals in cities
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  • Dear friend,

    The more affected areas may be ECR/OMR stretch, Velachery, Madipakkam, Tambaram-Velachery Road & surrounding areas etc.

    ks2071746
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  • Originally Posted by ks2071746
    Dear friend,

    The more affected areas may be ECR/OMR stretch, Velachery, Madipakkam, Tambaram-Velachery Road & surrounding areas etc.

    ks2071746


    Yes KS, These are the short term effects.

    On the long run 2-5 Years, When OMR/ECR prices are corrected & become livable, people will move to these affordable/workplace-near areas and make every other place as must-correct place.. especially all the places in South Madras.

    Cheers
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  • Dear friend,

    I agree that these are of short term effect which may prevail for the next 1 to 2 years. If the people, mainly IT guys, manage somehow, they may see the uptrend after 2 years or so. Now Banks are also willing to reschedule the loan for genuine and deserving cases. In addition, people under EMI stress, can think of reducing their expenses to barest minimum (THANNI SORU SAPPITAVATHU MANAGE PANNANUM) and may even think of disposing of their gold in possession to manage the intermittant tough period. If the gold in possession is not useful now, when will it be useful in one's life?

    ks2071746
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  • Chennai is best for IT offshoring

    I am actually seeing more demand for rentals in velachary then in Anna Nagar or Egmore ( established areas) which are far away from IT corridor.

    Even if jobs go, it will be more in Bangalore where some salaries by MNCs are hyped up for some candidates ( some 25 year olds are getting 12-15 lakhs annually in some MNCs in Bangalore without any logic)

    However, in Chennai where there are lesser MNCs and product companies, and mostly Indian IT service providers like CTS, TCS, Infy, HCL salaries are much more rational. Even the IT resources in Chennai are more hard working then in Bangalore (where they want to party more).

    So Chennai will actually benefit from global slowdown in IT budgets, as offshoring will grow more, and I too believe Chennai is the best Offshore location in the World with hard working talent.
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  • Dear friend,

    Nice to read a different perspective.

    ks2071746
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  • thats true the demand in annanagar for rental has come down as its far off from the IT corridor.
    CommentQuote
  • Dear friend,

    Also, Annanagar is a costly place for rentals and the fall in rent in high rental areas are much more than the middle/low rental areas.

    ks2071746
    CommentQuote
  • Originally Posted by ks2071746
    Dear friend,

    Nice to read a different perspective.

    ks2071746


    Probably he has invested in flats at chennai!!!
    CommentQuote
  • Entire Velachary should not be termed as Low/Middle rental area and Annanagar cannot be called high rental in comparison to Velachary.

    Velachary is a large region with different ranges. There are apartments in Velachary with rentals above 20K-25K per month and have demand due to nearness to OMR. At the same time in Anna Nagar 12k-15K monthly rental houses/apartments are not getting tenants as it is far away from IT corridor.
    CommentQuote
  • Originally Posted by contra
    Entire Velachary should not be termed as Low/Middle rental area and Annanagar cannot be called high rental in comparison to Velachary.

    Velachary is a large region with different ranges. There are apartments in Velachary with rentals above 20K-25K per month and have demand due to nearness to OMR. At the same time in Anna Nagar 12k-15K monthly rental houses/apartments are not getting tenants as it is far away from IT corridor.


    Dear friend,

    I agree with you. But Velachery has got more of middle/lower middle class people than upper class and Annanagar may have more of upper middle class than of middle/lower middle class. Annanagar is well laid out as compared to Velachery and nearer to city centre. Only thing is that the airport is away as compared to Velachery. One more thing on the prices. Annanagar flat prices range from Rs. 5500 to 7500/sq. ft. whereas the prices at Velachery are about Rs. 1000 to 1500/sq. ft. cheaper.

    ks2071746
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  • ks2041746,

    Here I was not discussing about Anna Nagar vs Velachary and not comparing the class of people or RE prices.

    I was talking in relation to the above topic. Velachary, located close to IT corridor has better rental yield for a house owner then Anna Nagar which is far away from IT corridor.

    So if so many people are getting fired in IT in US, Bangalore, Noida which are high cost locations. It is not happening in Chennai were IT salaries are more rational. I took the example of velachary rental demand to explain this phenomena.
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  • Dear friend,

    I understand.

    ks2071746
    CommentQuote
  • Originally Posted by ks2071746
    Dear friend,

    I agree with you. But Velachery has got more of middle/lower middle class people than upper class and Annanagar may have more of upper middle class than of middle/lower middle class. Annanagar is well laid out as compared to Velachery and nearer to city centre. Only thing is that the airport is away as compared to Velachery. One more thing on the prices. Annanagar flat prices range from Rs. 5500 to 7500/sq. ft. whereas the prices at Velachery are about Rs. 1000 to 1500/sq. ft. cheaper.

    ks2071746

    KS, I challenge you to SCIENTIFICALLY define what is the meaning of Upper middle, Middle and Lower middle class. These are very often perceptions.
    PS. These MYlapore cheri guys think that is the end of the planet, like Mumbai walas think Mumbai is the end of India and US folks think there is only US on Earth. Let us talk sense!
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  • Dear friend,

    More by common perception, I can say: ( take home before any house loan)

    01) Lower middle class < Rs. 10,000 P.M.
    02) Middle class Rs. 10,000 to Rs. 30,000 P.M.
    03) Upper middle class > Rs. 30,000 P.M.

    Others who have different views may respond.

    ks2071746:)
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