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Satyam's innovative way to cut costs

Last updated on: June 11, 2009 19:46 IST

The option of putting surplus employees into a reserve pool with reduced pay is an innovative model with a humane touch to address the issue of flab in IT companies, Satyam CEO A S Murty said on Thursday.

"In our current situation, we have a sizable number of associates who are not on billable assignments, while business support and strategic support units have to contend with reduced activity/scale. The 'people cost' as a percentage of our revenues has therefore increased dramatically," Murthy said in his address to associates.

He further said the Satyam board on Thursday approved an innovative and humane model to address this crisis - which we have christened as Virtual Pool Program (VPP). "It is a one-time exercise that allows our "excess" talent pool in India, to be retained albeit for a defined period of time (4-6 months) and at a reduced pay," he said.

He further said the company is burdened with the onerous responsibility of lowering costs while retaining key talent, an "understandably challenging proposition". People-related costs account for almost 60 per cent of revenues in the IT industry.

Associates on VPP may be recalled anytime during this period, based on clearly articulated and objective criteria, to meet emerging business needs. Salary and other terms and conditions as prior to the VPP period will also be restored, he added.

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