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Jobs lost, salaries cut, but India relatively unscathed

Nandita Mallik in Mumbai

2001 was the year of the axe. Throughout the world jobs were lost by the thousands. India was not spared by the turn of events either.

This was in stark contrast to what the average Indian software professional had become used to for a long time. The infotech boom of the 90s, which was the most broad-based expansions in the US in 30 years, threw up innumerable jobs for aspiring Indian software professionals.

More and more Indian whizkids zoomed off to the US -- the land of milk and honey. Opportunities galore awaited software professionals at Internet and IT firms which offered stock options and created overnight millionaires. But most of those firms have since turned belly up and jobs have dried up.

In 1999, Indian nationals received 44 per cent of the 115,000 H-1B visas issued compared with 10 per cent for Chinese nationals, according to the US Immigration and Naturalization Service. By mid-2001, a reverse migration was very evident. Software engineers were not only finding it increasingly hard to get jobs, those already working in the US or the UK on contract were actually being sent back home.

Vijay Krishna went to the UK as a consultant for Logica. Two months later, he was sent back to India. The firm laid off 40 people recruited for projects in Europe. "With cost-cuts the universal mantra and new business nowhere in sight, projects got scrapped and the company had no option but to lay off the surplus staff," explains Vijay.

"As primary industries -- aviation, manufacturing -- started performing poorly, India felt the heat of global slowdown. It is not just the IT companies that recruited software people. New jobs from these companies too vanished," he says.

However, he says that as US companies find it expensive to have development work done in America, they seek to take advantage of India's English-speaking software professionals. Several call centers, consequently, have mushroomed in India, creating many jobs. The industry has witnessed a growth of nearly 70 per cent in business process outsourcing.

For Indian software firms, slowdown, however, does not mean sinking in the red. It means 25-45 per cent annual revenue growth instead of the dizzying 100 per cent they saw earlier. While many of the top IT companies have not retrenched staff, they have cut salaries by about 10-30 per cent. The National Association of Software and Services Companies has forecast that the IT industry would witness 30 per cent growth in FY '01-02.

Yet, for all the hype about new jobs being created, a significant number were lost, as people languished for new means of livelihood.

The Indian manufacturing sector slipped badly, leading to a slew of job cuts. However, an Associations Council of the Confederation of Indian Industry survey for the period April-December 2001 shows that the sector may pick up from the end of this financial year, creating jobs in sectors like aluminium, cement, polyester filament yarn, and automobiles.

The media sector too was a victim. The American wire service Bridge went bankrupt and shut shop in India. AFX -- the financial arm of Agence France Presse -- shut down its India operations. Some other media agencies too handed out pink slips by the dozen.

But the most affected were those who at the start of the dot-com boom left their jobs to join Internet companies for fat paychecks. As the dot-com bubble burst, they were left out in the cold.

K Vasudevan of it-appointments.com, a Chennai-based placement agency, says no major change has taken place in the job scene from what it was at the beginning of the year.

"The problem is not behind us and I do not see any upswing in the near future with the US economy in recession. Most of the Indian companies - in all sectors -- and specially the public sector ones are laying-off the highly expensive staff and replacing them with lower salary employees," says Vasudevan.

"Even if India's software earnings were to expand by about 20-25 per cent in dollar terms, the declining trend in miscellaneous general services may not be reversed. This would impact jobs," says the Investment Information and Credit Rating Agency in a report.

Companies are paring staff to reduce flab, but they not necessarily in the danger of losing their muscle. "During the boom time, most companies, in their frenzy to get the best available person often hired at exorbitant salaries. Now that the economy has shrunk they are finding it difficult and are thus becoming lean, and mean," he says.

Companies outside the IT sector are not retrenching but 'actually redeploying their excess manpower'. S Bhattacharya, (head communications) Hindustan Lever Limited says that in spite of the slowdown HLL has not laid off anyone. Even, in instances, where they have closed down a few units, they have redeployed those people elsewhere.

While major airlines like Swissair, British Airways, Boeing and United Airlines have laid-off employees in the thousands, India's international carrier has not resorted to any such move. As Jyoti Kalani, senior manager PR, Air-India points out: "Most of our traffic is to the Gulf and South East Asia. So while other international airlines saw a 20-30 percent decline in traffic, we saw a drop of only 5-6 percent." She admitted that Air-India was cutting costs but not through retrenchment. "Yes, we are taking steps to cut cost and this is on a day-to-day basis."

Even Jet Airways denied that they are laying off people. Nandini Verma, vice-president (PR), said: "No we are not retrenching people. Yes, after September 11, there has been a recruitment freeze. As traffic slumped immediately after the terror attack, many senior officers including some pilots opted for a 10 per cent reduction in their salary for two months. It has been restored in December."

While the economy has slowed down, the magnitude of layoffs in India is nowhere close to what the US and other nations are experiencing. While thousands of jobs fell by the wayside globally, India managed to get away with just a few bruises. And with economists forecasting a turnaround in the economy soon, the worst may have passed for the country and its workforce.

2001: The Year That Was…
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