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Retrenchment shadow falls on HR personnel

By Seema Sindhu & Bibhu Ranjan Mishra in New Delhi & Bangalore
Last updated on: November 08, 2008 13:32 IST
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With most companies either retrenching or freezing recruitment plans, human resources personnel across sectors are a worried lot.

Recruitment-related HR executives are being moved to other HR functions like training and development and other day-to-day HR functions, or being taken on contract. If things worsen, there could also be layoffs.

A Sudarsan, vice-president, sales and marketing, Expertus HR (a wholly-owned subsidiary of US based Expertus Inc), admits: "There will be layoffs in the near future, and companies will increase temporary staff. Meanwhile, I don't forsee any hikes for HR executives."

Moreover, the mix of contractual employees in the HR team across various sectors is expected to increase. Vodafone, for instance, has 25 per cent of its HR staff on a contract basis.

Companies like Wipro, Infosys, TCS and iGate, too, have a mix of contractual employees in their HR team.

Nandita Gurjar, Senior vice-president and group head, HR, at Infosys Technologies, confirmed that the company has some employees in the HR teams who work on contract basis. She, however, declined to divulge the numbers. "Yes, we have some employees who are on contract, but about the numbers, I have no idea," she said. Infosys has about 300 people in their HR department.

Srinivas Kandula, global head, HR, iGate Corporation, said: "We have about 30 people in our HR team who are on contract basis, but they mostly search job portals and source resumes etc. Because there is not much of career growth for such activities, we prefer contractual employees."

EDS (bought over by HP) and MphasiS (now a subsidiary of EDS), too, have rationalised their HR department functions.

Several real estate players like DLF and Unitech, too, have reduced their HR staff and stalled recruitment for the present. Some subsidiaries of ICICI Bank are also said to have cut their HR staff.

Rakesh Malik, practice leader for globalisation and business transformation practice at Hewitt Associates (HR consultancy), concurs: "Companies might shrink the number of recruitment-related executives in future. But, so far, I haven't seen any layoffs with our clients.

In fact, in slowdown times when companies feel the compelling need to become more aggressive about quality, other functions of HR like performance management, planning and evaluation become more important. Learning and development programmes become significant. Compensation and retention activities become priority that requires more strategic services of HR."

Sampath Shetty, vice-president, TeamLease Services, explains: "When recruitment slows down, operations HR is the first area to bear the brunt. But strategic HR becomes more important. Operations people are getting into training for other strategic HR functions."

Of them, temporary executives are the first to be hurt. "Contract renewal period has shrunk from 1 year to 3 months," adds Shetty.

In effect, the role of managed staff services (wherein the HR staff working for companies are on the payrolls of the placement agencies and not employees of the companies) and recruitment process outsourcing (RPO) is expected to gain traction.

Managed staff services will benefit the most as more companies will go for managed staffing, which gives companies staff at variable cost as and when required.

"We have seen a 10 per cent increase in demand for temporary staff in the last one-and-a-half month. The demand is expected to double in the next one year," adds Sudarsan.

But managed staff companies are also experiencing the ripples of the slow down.

"Companies are asking to reduce management fees (fees paid to managed staff companies on managed staff) by 50 per cent," Sudarsan informs. Most companies have started reducing management fees, others are forced as a result.

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Seema Sindhu & Bibhu Ranjan Mishra in New Delhi & Bangalore
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