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IT layoffs loom, union gears for battle

Cognizant had last week announced it would lay off 5,000-7,000 employees globally

By K.M. Rakesh in Bangalore
  • Published 8.11.19, 2:49 AM
  • Updated 8.11.19, 2:49 AM
  • 2 mins read
  •  
Infosys plans to save $100-150 million in the current financial year mainly by recruiting fresh workers wherever possible. This is expected to lead to job losses for its mid-level and senior-level employees (Shutterstock)

Fears of impending layoffs in the information technology industry have prompted a leading trade union to warn the companies against any wanton sackings and appeal to the government to protect the workers’ rights.

The move by the Karnataka State IT/ITeS Employees Union (Kitu) comes amid a series of media reports about downsizing plans in the sector and oblique hints — and even some open admissions — from the companies themselves.

Cognizant, the country’s second-biggest IT services company that employs 200,000 people in India, had in its earnings call last week announced it would lay off 5,000-7,000 employees globally from the mid-level to senior level to bring down costs.

This is likely to hit its Indian operations the most, as the country accounts for two-thirds of the company’s 300,000-strong global workforce.

A source from Cognizant, who cannot be named, told The Telegraph that the company’s global plans envisage layoffs by the middle of next year, and the number of Indian workers affected would be known only then.

“We don’t disclose the breakdown of the total attrition, which includes those who quit to join other companies,” he said. “Our global attribution rate is between 20 and 24 per cent, which is on a par with industry standards.”

Media reports have said that Infosys plans to shed 12,000 workers but its chief financial officer, Niranjan Roy, told reporters recently there were no immediate layoff plans.

But Infosys plans to save $100-150 million in the current financial year mainly by recruiting fresh workers wherever possible. This is expected to lead to job losses for its mid-level and senior-level employees, Roy told an analysts’ meeting recently.

A source from Infosys said there were no “planned layoffs in sight” but didn’t rule out ad hoc trimming from time to time.

While the employees are staring at uncertainty, their trade unions have started consultations on how to counter any layoff plans.

Kitu, which is backed by CPM labour arm Citu, has launched an awareness campaign to ensure the workers don’t resign under pressure.

“We have taken a public position on this matter and are trying to educate workers not to resign when asked,” its president, V.J.K. Nair, told this newspaper on Thursday.

A Kitu delegation led by Nair met state labour officials on Thursday to discuss the possibility of layoffs.

“On a suggestion from them, we shall be filing a petition with the labour department against layoffs,” Nair said after the meeting.

“These companies cannot just throw their workers out since there are laws that protect employee rights. Chapter 5B of the Industrial Disputes Act states that layoffs of industrial workers can be done only with prior permission from the government.”

Kitu posted a statement on its Facebook page on Wednesday against any layoffs. It sought “urgent intervention of” the state government and requested it “to take stricter actions against the companies who violate the labour laws”.

Contacted by this newspaper, industry body Nasscom asked it to send its queries in an email. No reply had arrived till late evening, several hours after an email was sent in the afternoon.

‘Mid-level’ alert

Information technology companies in the country have no choice but to lay off at least five to ten per cent of their middle-level staff to ward off margin pressure and become more agile, IT industry veteran V. Balakrishnan said on Thursday, PTI reported.

Mid-level staff make up 20 to 30 per cent of the IT companies’ total workforce.

Balakrishnan, former chief financial officer with Infosys, said the companies had built a lot of fat in the middle, so they needed to reduce it.

“Also, they have to get employees who understand new technologies. They have to get rid of some of the employees who are more on the legacy, and try to attract talent which is more digital. That has to happen; there is no choice,” he said.