A few continents away, the New York-headquartered Lehman Brothers had just posted record revenues and profits, and was handling assets of over $275 billion. At that time, Vegi was sitting on multiple job offers. One was from American outsourcing giant EDS and the other from Wipro, India’s second largest IT company. Both offered to pay him substantially more than what he was earning at TCS. But EDS was willing to pay a little more than Wipro.

Multiple job offers and generous pay hikes were nothing unusual in the IT industry. Talent was hard to come by. Companies had to pay plenty in cash, bonuses, perks and stock options to retain existing employees, and attract new hires by the thousands. New contracts from US clients were flowing in easily and IT companies had a simple formula for success: they could grow as much as they could hire. They often behaved like sharks in a feeding frenzy. They hired indiscriminately.

Vegi chose to accept Wipro’s offer ahead of EDS. “I thought my job would be more secure with an Indian company,” he recalls. Soon after, on September 14, Lehman Brothers filed for bankruptcy. In three months, the bank would be just a footnote in financial history. When Vegi heard the news, he was in Vizag for his housewarming ceremony. “Good I moved out of that account,” he thought. But he had no inkling of the catastrophe awaiting him the next day.

On September 15, Vegi was summoned to his supervisor’s cabin. He had been a part of Wipro’s ‘free pool’ (the bench, IT industry lingo for people without any work to do) for a few months. “The supervisor asked me to resign as there were no projects,” recalls Vegi. If Vegi were to be assigned a project during his notice period, the supervisor promised to reinstate him. The supervisor then pushed his laptop across the table and asked Vegi to type out his resignation letter. Flustered, Vegi asked for time.

He didn’t get any. Over the next three hours, Vegi says he was badgered with half a dozen calls from his supervisor. Pressured, he quit the same day. Vegi alleges that his efforts to find other projects within the company during his one-month notice period were spiked. Angry at the “betrayal”, he demanded to take back his resignation almost a month later. “I was told that I could not do that,” he recalls. He was given an extra month. Wipro, he alleges, kept up the pressure—resign or be terminated from service. Wipro, on its part, says there have been no layoffs due to business reasons. Says Pratik Kumar, Executive Vice-President-Human Resources, Wipro: “The involuntary exits have been based primarily on performance parameters.”

Vegi resigned for the second time in March 2009—this time for good. He had spent a depressing nine months on the bench in his year-and-a-half long stint at Wipro.

Sampath Vegi: ‘Resigned’ from Wipro in September 2008. Barely a year before that, he was working with TCS and had offers from two major IT companies. He chose Wipro, but was never assigned any projects. Last September, badgered by his supervisor, he was forced to quit.

Two painful months have gone by since Vegi quit Wipro. He has given up all hope of finding another IT job. His family has moved back to Visakhapatnam and he plans to follow them as he can no longer pay the rent in Bangalore. Vegi is also in the final stages of selling his Visakhapatnam house for Rs 18 lakh as he can no longer pay an EMI. He had purchased it for 22 lakh.

Jobs On The Block

Vegi’s IT dream has turned into a nightmare. Across India, thousands of dreams of IT professionals lie shattered as companies are shedding employees to cope with the slowdown. Infosys Technologies, the flag-bearer of the Indian IT dream, said it will show “zero tolerance” to non-performers, and put 2,100 employees under the scanner. The new Mahindra management of the troubled Satyam Computer Services has announced that it has 10,000 unwanted employees. Precise numbers on the job losses in the IT sector are not available. But the figure could run into tens of thousands. Some experts say that 3.5-5% of the 2.2 million IT jobs have already been lost or are likely to be lost in the next few months. That puts the job loss number at 77,000-110,000.

This is not just an IT industry problem. This could potentially lead to a social crisis. The software industry employs more people than the Indian army, the third largest army globally. Over 80% are young (under-40), in the prime of their earning lives, and have families to support. Even though less than 5% of jobs are at risk now, a fear psychosis has gripped the entire community of IT professionals. Many have seen a colleague being fired. They are worrying that they could be next.

This fear has led to a freeze on spending. Pubs in Bangalore are empty; one is even offering “recession discounts”. Real estate prices, both housing and commercial, are sliding. The Promoters and Builders Association of Pune has launched a scheme where the developer will pay three EMIs in case a customer loses a job. Senior officials in a private sector bank confirm employees in the IT sector are in the negative list of borrowers. Many jobless are putting their cars and houses up for sale. Parents don’t want to marry their daughters to IT professionals.

Prakash Suman: ‘Resigned’ from iGate in April. In late-2008, the company assessed him to be an exceptional performer. However, in April 2009, with not enough projects flowing in, iGate gave him the lowest rating possible and told him it was time to leave.

Oh Bangalore, how you have fallen! The city’s IT wealth was once the envy of the rest of the nation. The software professional was once the dream job of millions of students. There were over 10,000 individual dollar millionaires (with an investible surplus of Rs 4.5 crore) and 60,000 super-rich people (investible surplus of Rs 50 lakh) in the city in 2006. Bangaloreans invested Rs 22,000 crore in mutual funds in March 2006, up from Rs 8,000 crore in June 2004, according to a study by American Express. But all the fame and wealth of the IT professional is slowly melting away.

Resign Or Be Terminated

Outlook Business conducted extensive interviews with 25 IT executives who have been fired. There is one alarming thread that runs across all their stories. Most of them allege they were ‘unfairly’ shown the door on ‘cooked-up’ grounds of non-performance. The real reason, they allege, is that IT companies were not getting enough business.

Thirty-five-year-old Prakash Suman claims he was forced to resign this April, only a few months after being recognised for exceptional performance by Bangalore-headquartered iGate, his employer for three years. “They did not tell me that it was because of the recession or that they do not have projects,” he says. “They just blamed it all on me,” he adds.

Suman, a project manager, says a few days before his ‘resignation’ a senior project manager was inducted above him. He was then put on the bench. Two days later, Suman says he was given a ‘needs improvement’ rating—the lowest possible—during his appraisal. “How can an employee go from being a good performer to one who needs improvement in a few months?” asks Suman. “I objected. My superior told me that even if I went for a performance improvement programme, I would be sacked,” he adds. Afraid of termination, Suman resigned. iGate’s global HR Head Srinivas Kandula says the company has not had a “single business layoff”. He also says that only 190 of the company’s 6,500 strong workforce were asked to leave for “performance reasons”.

Termination is a black mark on an IT professional’s CV. It mars their chances of finding another job. Resignation is more honourable. “Employees are asked to resign because a termination shows up badly in his experience letter. Earlier, people, when confronted with a bad appraisal, would just leave as there were a lot of jobs outside. Now, some of them are not so willing to resign,” says Kandula.

Former Infosys employee Saurabh Gupte recounts a similar experience. But to understand his tale, one has to understand Infosys’ appraisal process. The company has a Consolidated Relative Ranking (CRR), wherein people doing similar tasks are ranked. A CRR1 rating is given to the best performer and a CRR4 to the worst. Earlier, it was fine if a team did not have anyone with a CRR4 ranking. But now, the company mandates that because the ranking is relative, there must be at least a few with a CRR4 ranking in every team or peer group, says Gupte.

Rajesh Kumar: Fired by Wipro in April. He was made to work on multiple projects for multiple bosses, given a poor appraisal and sacked. Now, he dodges calls from relatives and friends who are still in the dark. Meanwhile, he worries about his child, rent and job, in that order.

Former Infoscions allege that employees in every team were being ‘force-fitted’ into a CRR4 rating, in spite of achieving their targets. “Earlier, people who got a CRR4 rating were sent for performance improvement plans (PIPs). More than half of them would clear it. Now, people who have got a CRR4 in either one of their bi-annual appraisals are just asked to leave,” says Gupte, who lost his job in April.

Infosys denies that employees were being thrust with adverse ratings or were being laid off for business reasons. Says an Infosys spokesperson: “We look for consistency in performance and have low tolerance for under-performers. In the last cycle, appraisals were conducted for 60,000 employees. Of the bottom 3.5% (2,100 employees), 850 resigned on their own before the completion of the whole appraisal process, about 643 are on PIPs and the balance (657) have been counselled out.” The company also said that about 4,900 employees voluntarily quit the company in the last three quarters.

Gupte is presently living off the settlement that Infosys offered, including a few months’ salary and benefits. If he does not get a job in another month or two, Gupte plans to move his family (wife and a two-year-old) to his parents’ house in his hometown in Western Maharashtra. His year-and-a-half old sedan is up for sale at a car mela. “I just cannot afford to pay the car and the home loan EMIs at the same time,” he sums up.

Every industry goes through rough patches and layoffs are a reality of modern-day business. But the question is this: are IT companies saying as much when they are layingoff people? Or, are they using poor performance as a lame excuse to force employees to resign? “IT services companies, especially the Indian ones, like to take the high moral ground when it comes to sacking people,” says Karthik Shekhar, General Secretary, Unites, a Bangalore-headquartered union for IT and ITeS employees. “They still want to give the impression that they do not sack employees during bad times,” he says.

Industry observers who subscribe to this argument point to attrition data as evidence. “Everybody knows how bleak the job market is,” says a Mumbai-based analyst. “But why is TCS’ attrition 13% in the last two quarters? Why is Infosys’ at 11%?” he quips. “The companies claim that a bulk of these are voluntary exits…but it’s hard to believe so many employees are leaving because they have found better jobs,” he adds. The charge: employees are being forced to resign, and are not being fairly laid off.

Workers allege that IT companies are finding excuses to sack people or renege on job offers. Binoy Francis got an offer from Accenture late last year. Francis was offered a 50% hike. A week before, he was scheduled to join the company, an HR executive from the company called Francis and informed him that there was a discrepancy in his résumé and withdrew the offer. “They apologised, but they never told me what it was,” says Francis. Accenture refused comment.

In another example, one of the largest IT companies in Bangalore sacked an employee on the grounds that there was a discrepancy in his Class X marks mentioned in the CV. He was fired recently, after working for the blue-chip company for four years.

Japanese language translators in a Bangalore-based MNC technology company are being made to perform financial analysis to make them quit, instead of being honestly told to leave. The team of 25-odd translators has, since, halved.

Experiences like these are making IT workers disenchanted. “There’s no question of trusting companies any more,” says Suman. P Raghuram who lost his job with a Dutch MNC has started an online blog for people who have been laid off (www.lay-off.org). Vegi joined the IT union Unites during his last days at Wipro.

Shekhar and Prithviraj Lekkad, the Laurel and Hardyesque duo who head Unites, claim membership (largely BPO employees) has shot up from 5,000 to 18,000 in a year. “A few years ago, we were the fringe guys. People would laugh at us. Not anymore,” says Unites’ Shekhar, a former IBM employee. Lekkad has worked for IT companies where he signed pink slips. It’s something he regrets.

Could this crisis give unions a toe-hold in the IT workforce? IT companies will squirm if the answer is in the affirmative.

Boom To Bust?

Sridhar Mitta was the first employee of Wipro Technologies. An industry veteran with over 3 decades of experience, Mitta is a treasure trove of anecdotes. Sample this one. When Mitta visited the Santa Clara headquarters of Sun Microsystems to pitch for business in 1993, the first question he was asked was: “How do you know English?” Mitta launched into a crash course in history, touching on the East India company and British rule, among other things. “The irony was that one of the founders of Sun was an Indian,” recalls Mitta, now Managing Director, e4e, a tech company incubator.

Karthik Shekhar (left) and Prithviraj Lekkad: Founders of Unites, a union for IT employees. They have proved that even educated IT employees join unions. A year ago, they were called the ‘fringe guys’. Now, their website receives over 50,000 hits a mon th. Union membership has risen almost four times.

Mitta has seen it all. He has seen the number of IT companies in Bangalore increase from 13 (1991-92) to about 3,000 now. Bangalore’s population has gone up from 6 million to 8 million in over a decade. In that time, Infosys rolled out three employee stock option plans, in 1994, 1998, and 1999. Millionaires mushroomed in Bangalore; at one time, one in every four Infoscions was a millionaire. Rentals in areas like Koramangala and JP Nagar more than quadrupled in the boom years. An army of IT engineers emerged and thrived in the garden city in a short time.

Vivek Kulkarni was the IT Secretary of Karnataka during much of Bangalore’s boom. “The demand was so much that we decided to triple the number of IT engineers passing out from colleges in the state from about 10,000 graduates in 2000 to 30,000 in 2004,” says Kulkarni, who now heads BrickWork, a Bangalore-based outsourcing firm and a ratings agency.

KN Somayaji: Companies and CEOs consult this astrologer before setting up factories or announcing IPOs. Over the last six months, his clientele of IT companies and professionals has grown 80% and 300%, respectively; and their stock in the marriage market has dipped. 

“I’ve seen the companies hire indiscriminately during the boom phase,” says a Mumbai-based CEO. It was a disaster waiting to happen. And it did.

Hiring And Scams

H Shivaraj, 29, has cultivated a taste for single malt whisky and expensive watches in the last four years. The Bangalore resident wears a “modest” Omega Seamaster. “It’s 007’s watch,” he laughs. Shivaraj is a millionaire. Back in late-2004, Shivaraj was jobless. A BCom graduate stuck in a techie town. His break came in 2005, when his cousin joined a tier-I Indian IT services company as a HR manager. “My cousin told me that his company was looking for thousands of people for the IT services and BPO business, and asked me to set up an HR consultancy,” recalls Shivaraj. His cousin pulled some strings and Shivaraj was empanelled as an HR vendor in his company. Soon, business started flowing in.

By the end of 2005, Shivaraj had placed over 400 employees across half a dozen IT services companies, including Satyam, TCS and Oracle. He would earn one to two months’ salary as fee for every placement. All along, his cousin was getting a cut from the earnings. “Companies were in a hurry to hire. Employees were job-hopping all the time,” says Shivaraj. “I would set up two to three interviews for one person the same day. The faster the talent got placed, the more money I made,” he adds.

Shivaraj and his cousin had a good scam going. The IT companies he worked with were too busy to notice. Stories of similar scams abound in Bangalore. A few have been detected. “One of my good friends, the CEO of an IT company had a strange experience,” says a Mumbai-based COO of a mid-tier IT company. “His VP for human resources had left his mobile behind. Since the phone was ringing incessantly, he picked up. A voice on the other end said: ‘Sir, the money has been credited to your account. When can I collect the appointment letter?’” The VP was sacked, but the CEO continues to wonder about the hundred employees that the company added in that period.

A techie who spoke to Outlook Business says he was asked to pay Rs 15,000 as ‘advance’ for a job at a tech MNC two years ago. The placement agent promised to “tweak his resume” and use his contacts to secure a job. The techie got cold feet, and turned the offer down.

There were other scams. “You ask an employee with whom you share a good rapport to move to a new company,” says Shivaraj. “The first month the employee gets trained, the second month he works a bit. Once the third month is over, you get him to jump ship again,” he explains. Keep them hopping jobs. The employee wins: he gets two hikes in a short period. Shivaraj wins: he gets his cut once the employee completes three months. The company itself will shrug it off as attrition, considering that just a few of the 50-odd employees that Shivaraj ‘supplied’ quit early.

Those days are long over. “We would make campus offers and plan our hiring 12-18 months in advance,” says a Mumbai-based HR head of a mid-sized company. Companies wanted to grow quickly. They hired aggressively. But they are now left with huge surplus staff. “None of us saw this coming,” he adds.

Real estate: Many infotech parks have empty office spaces. Occupancy has hit rock-bottom and some buildings have even put up ‘to let’ signs.

Hariprasad used to head a consulting company called Inception International. A year-and-a-half ago, he had 28 employees. He was placing 100 people a month. Today, with hiring down to a trickle, Inception has a staff of three. “There are no volumes anymore,” says Hariprasad. His guess: more than half of the placement agencies in Bangalore have shut shop in the last few months. “Everybody in the industry knows that these scams happened in the last three years…they are inevitable during a boom,” says a Pune-based CEO. “What’s happening now—layoffs and salary cuts—is the clean-up. The riff-raff will go out and some good people may lose out too,” he adds.

Epilogue

Daivajna KN Somayaji is comfortably seated in a guest house at the Mumbai headquarters of one of India’s largest business houses. Somayaji is a vaastu expert. Companies and CEOs consult him before they commission a factory or set the date for an IPO. One of the country’s renowned astrologers, his roster of clients includes film stars, chief ministers, business magnates and, according to some, former White House intern Monica Lewinsky. He is in Mumbai to advise a business group on its IT business. His clientele of companies and IT professionals has grown by 80% and 300%, respectively, in the last six months. “Earlier, people looked for IT grooms. Now, their demand in the matrimonial market has fallen,” he says.

Rajesh Kumar is not in the marriage market, but he is in the job market. He was laid off by Wipro in March. Sitting in a rundown coffee bar in Bangalore, he is thinking about
PediaSure—400 gm of the infant diet supplement costs about Rs 450. Rajesh Kumar is not sure if he will be able to buy it next month for his three-year-old daughter. “I am scared every time she coughs. A good child specialist charges Rs 250 for a consultation,” says Kumar, who joined Unites in late-2008.

Last month, Kumar and his family shifted from a Rs 8,500 per month apartment to a Rs 3,500 per month house in a “slum-like” locality in Bangalore. His relatives still think he works for the software giant. Kumar says he was made to report to multiple bosses, and work on multiple projects, mostly non-billable ones. He spent seven of his 15 months with Wipro on the bench. Kumar alleges that internal interviews and appraisal processes were rigged to give a poor appraisal. “The worst part was sitting on the bench day after day. No work, no Internet access. But I still had to clock nine-and-a-half hours a day,” he says. In the end, he was handed two ‘needs improvement’ appraisals. When he protested, he was told to quit. Kumar refused. In March, his services were terminated. One more dream that turned into a nightmare…

Many names in the story have been changed on request. If you have been laid off, or if you have a point of view on this story, do write to us at olb AT outlookindia DOTcom