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Satyam Computer Services Ltd is launching a one-time programme -- christened Virtual Pool -- aimed at addressing staff costs, while retaining talent.
Effective this month, the programme is applicable on those based in India and allows associates (the term it uses for Satyam employees) to take time off from work on a reduced pay structure (for up to six months) while they continue to retain their employment.
The company expects approximately 7,000 to 10,000 associates will be a part of the Virtual Pool programme -- which is designed to cover associates who have not been in billable roles for three months or more and includes support resources -- during the period that it is in operation, Satyam said in a press release Thursday.
"The Virtual Pool is an innovative way of retaining the excellent human assets of Satyam, despite the difficult global economic situation. The recessionary climate that has seriously affected the IT industry, in addition to the unprecedented set of events that Satyam faced recently, has added to its pressures. The programme is a unique way of retaining associates and developing them further through training, while ensuring the financial viability of the company," said Kiran Karnik, chairman .
Associates identified to be a part of the VPP will receive 'basic' pay, in addition to provident fund and medical insurance. Their employment status will not be disturbed and, based on business recruitments, associates may be recalled and reinstated on full pay and benefits.
The VPP is a one-time exercise that allows Satyam's 'excess' talent pool in India to be retained, albeit at a reduced pay for a defined period of time (four to six months, depending on the band of associate).
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 prior to the VPP period will be restored.
Terming the VPP as an 'innovative humane model,' Satyam CEO A S Murty wrote to the associates on Thursday: "The economic recession -- the worst in recent times -- has resulted in a significant deceleration of growth for our industry, which is used to seeing growth rates in excess of 30 per cent year-on-year. Investments were made in people and infrastructure, anticipating such continued growth, which have since slowed down.
'The events of January 7, 2009, and the consequential uncertainties in the initial weeks thereafter, resulted in customer losses and revenue reduction, despite our best efforts. This has also resulted in release of associates from such billable assignments.
'As you are well aware, in our industry, people-related costs account for almost 60 per cent of our revenues. In our current situation, we have a sizeable 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.'
Murty added failure to address this quickly and effectively would result in an inability to make timely payments to associates and vendors, reduced customer and investor confidence and in the inability to make investments in business retention and growth.
'We are, therefore, burdened with the onerous responsibility of lowering costs, while retaining key talent -- an understandably challenging proposition. Obviously, there is no single 'right' answer for this complex and unprecedented situation. Each organisation or individual may choose to address this in varied ways,' he added.
The CEO said associates on VPP would continue to have access to Satyam's online learning and skill enhancement programmes, besides enabling career and financial guidance and counselling.
'Satyam and Tech Mahindra continue to explore options to optimise resource utilisation. We have achieved a fair amount of success in the past four weeks and this will be vigorously pursued.
'We have tied up with approved organisations to assist in outplacement support -- should that be sought by associates, given their personal circumstances. VPP provides the flexibility for associates to take time off to meet personal aspirations, enhance skills, take up faculty roles, contribute to society, pursue hobbies, etc,' he said.
