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Zero tolerance for non-performance: IT

April 24, 2009 09:15 IST

Before the global slowdown, India's IT services companies constantly worried about attrition rates and often lowered the bar on performance as a result.

Over the past year, though, the new term is 'downsizing' -- shrinking the employee base so that employee costs match slower business growth.

This fiscal, as the recession in the western markets start biting, their tolerance for non-performers is down to zero. 

India's second-largest IT services company, Infosys, for instance, officially announced putting around 2,100 non-performers under the scanner after the end of its annual performance cycle.

India's leading IT services company TCS, too, admitted to telling 1,100 employees to pull up their socks or perish.

Now, Bangalore-headquartered Wipro, which derives a majority of its revenue from IT-BPO services, announced that it put close to 7 per cent of its employees in the list of non-performers in FY09 against 2 to 3 per cent in the previous fiscal. This has affected almost 3,000 employees who have already been released from their jobs, said officials.

Close to 200,000 IT employees are estimated to have quit by the end of 2008-09. Around 50,000 people are said to have left their companies involuntarily (voluntary attrition rates have almost halved to around 7 per cent).

Fiscal 2009-10, according to the HR head of a leading IT services company, will be one of the toughest years for the Indian IT industry, with only around 100,000 joining.

"For FY09, we probably have seen 5 to 7 per cent of our manpower employed with the IT business being released, against 2 to 3 per cent a year back," clarified Girish Paranjpe, joint CEO of Wipro's IT business.

Admitting that performance criteria have now become more stringent than they used to be, he added: "It is also as a result of the slowing economy."

"Performance management tools have been always used by companies to reward good performers and weed out the bad ones. However, due to the significant growth over the last few years, they were not enforced. With the industry facing the economic downturn, it is using this tool fairly effectively. And it is being done all over the world," explained Som Mittal, president of software body Nasscom.

Asked to comment on the estimated 200,000 exits this fiscal, Mittal said: "These numbers don't matter that much. But I believe there will not be too many additions this financial year. The IT industry already employs 2.2 million people in India, which is fairly high."

The scanner is not restricted to large-cap IT firms. HCL Technologies is a case in point. Although the exact number of people who were asked to leave the company is not known, the company had dismissed about 450 people in Delhi and Bangalore for non-performance.

The company is also reportedly asking the bench resources to take a salary cut of 25 per cent or find projects from within the company, failing which they will be asked to leave.

Patni Computer Systems, too, is understood to have asked close to 500 people last year to leave.

Infosys HR Head TV Mohandas Pai dubs the industry's unwillingness to accommodate unproductive staff "zero tolerance for non-performers."

Companies are also not willing to give such employees extra time to improve. "Typically, we allow such people to improve," said S (Kris) Gopalakrishna, CEO and MD of Infosys Technologies, adding: "But owing to the challenges and cost pressures, we cannot afford to let them remain in the company."

Bibhu Ranjan Mishra in Bangalore
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