The recent sacking of around 600 employees by Indian IT major Wipro has not immediately impacted the Indian IT industry or other company stocks, but it sends out a strong signal that non-performers will need to buckle up and there is no room for complacency.
Market analysts say that sacking of 600 employees in a company that has more than one and a half lakh employees is a very insignificant number. Some sackings do take place every year during March-April time frame during annual appraisals. Experts say that this is also an indication of a structural change in the IT industry wherein many low-end jobs are being automated.
“It is my observation that there has been a significant slowdown in the net hiring by many IT companies, which has almost halved in some cases. Moreover, the companies have significantly increased their bench utilisation rates and the revenue generation target per employee. For instance, Infosys expects a revenue of $60,000 per employee in a year which was earlier around $45,000 per employee. At the same time, no employee is expected to sit on the bench for more than 2-3 weeks, which was earlier, close to 4 months. The aim is to increase employee productivity and introduce automation technologies which was not the case earlier. Currently all this is not affecting the IT company stocks. Currently, Wipro is trying to restructure its middle east and the Indian business and this sacking could be a result of this restructuring,” said Amit Chandra, Research Analyst (IT), HDFC Securities.
Another observer says that Wipro is changing its conservative image and now wants to be more competitive and productive. At the same time the company also wants to shed extra flab and chuck out non-performers which was not the case earlier. “Wipro is following a strict appraisal system because of automation technologies. It was earlier very generous with their employees and did not exercise mass sacking but all that is set to change and in the time to come it may sack a much larger number of people. Non-performers who are unable to adjust to new technologies and who do not upgrade their skills may go. This will happen not only in Wipro but in other IT companies as well,” said Kris Lakshmikanth, the founder of the recruitment firm Head Hunters India Limited.