Apr 04, 2009 02:35 AM
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While the global financial meltdown is taking its toll on job markets across the globe, India’s Silicon Valley, Bangalore, is facing its own existential problems.
The city — over and above the economic slowdown–driven pink slip mania— is losing jobs to neighbouring states. Karnataka has already lost 45, 000 information technology (IT) jobs this financial year to Chennai And other places, according to T.V. Mohandas Pai, director and head of human resources at Infosys. Some fear the state may lose another 30, 000jobs in the next financial year if the government does not act fast.Industry doyens say investors are shying away from Karnataka due to cumbersome regulatory procedures that lead to inordinate delays in clearances.
“During 2007-08, software exports from the state — the bulk of it from Bangalore — grew just by 11 per cent, even as Andhra Pradesh galloped at 41 per cent and Tamil Nadu at 37 per cent. The national average growth rate of IT exports was 29 per cent, ” says Avinash Vashistha, CEO of Tholons, a Bangalore-based research firm. Vashistha adds the state urgently needs to focus on infrastructure development, fix traffic and road problems, improve on education and simplify land acquisition, allotments and regulation.
Losing out to competition is one thing, but a global downturn is quite another for India’s IT capital. Data provided by the state government records a six-month stagnation in growth of the IT industry at 28 percent. This is expected to affect IT revenues in Karnataka — which accounts for 36 per cent of the Indian total.
“The global recession will have some impact on IT and BPO companies, ”says R. Rajalakshmi, director of Software Technology Parks of India(STPI), Bangalore. “But the figures are yet to come out. We are watching the situation carefully.” But the impact of the situation will only be known by December, according to Ashok Kumar C. Manoli, principal secretary, Karnataka, Department of IT. The state government has managed to get assurances from IT majors Tata Consultancy Services(TCS) and Infosys that there will be no retrenchment. But rumours of impending large-scale layoffs as well as some facts belie the government’s confidence.
In February, TCS asked some 500 employees to leave, citing non-performance. Shortly afterwards, IBM reportedly laid off 700 freshers. In July, Patni Computer Systems sacked 400 employees.Hewlett-Packard announced 25, 000 layoffs in September, while Yahoo Sacked 1, 500 just a few weeks ago. Many recruitment analysts have also written off the IT, financial services and real estate sectors, which, they say, will be the worst hit with pink slips. According to oneonline recruiter, the impact has been evident for over six months now.IT firms have already lowered targets for fresh recruits by 20-40 percent this year. Even biggies such as Infosys, Wipro and Satyam have toned down their annual hiring numbers by 29-40 per cent.
“We are hoping to bring in newer companies who we could not have accommodated earlier, ” says Sourav Mukherji, head of placement committee, Indian Institute of Management, Bangalore. Mukherji is hopeful that things will bounce back by March next year when the final IIM placements take place. But there is a buzz of retrenchment in the air. American Express has recently retrenched 100 employees in India. Nokia reportedly plans to axe 600 jobs. According to the Confederationof Indian Textile Industry, the textile sector has already shown thedoor to some 600, 000 people directly and about 1.4 million indirectly.How long this will last, no one can tell. For now, most will have to live with it.
