Meltdown: Temping firms rejoice

NEW DELHI: Global financial crisis and the consequent knee-jerk reaction in India--retrenchment and layoffs have given temping firms a reason to
smile.

Amidst layoffs and cautious hiring as means of cost cutting, temporary and contract staffing is fast emerging as a lucrative option. The demand for temporary staff across sectors has been steadily growing at 25-30 per cent over the last six months.

India Inc is increasingly realising that contract or temporary staffing can help reduce cost of hiring, absorption, managing people and compliance. Currently, the top five employers in India account for nearly 1.20 lakh temporary employees in the organised sector.

“With the global crisis affecting almost all sectors in India, companies are now more keen on hiring temporary and sub-contracted staff,” says Kelly Services India country general manager Rajiv Mehrotra.

According to the industry estimates, organisations are saving anywhere between 20-40 per cent in their total wage bills by opting for temp staffing. It is also helping companies to identify requisite talent with specific skills as per their own requirements.

Most of the temp hiring is done by sectors which engage in numerous short-duration projects. Sectors like IT, ITeS, BFSI, aviation, hospitality, manufacturing and infrastructure are reported to have increased their contract staff considerably.

These include companies like Microsoft, GE Money and Big Bazaar, among others. Contract staff is being hired across levels in various sectors as it helps companies take on more time based assignments while reducing costs of permanent hiring.

“When it comes to conditions of working for temporary or sub-contracted staff, they differ across sectors, but primarily, legal obligations remain similar for contracted and permanent staff,” says e2e Business Solutions (a HR consultancy firm) director Yeshasvini Ramaswamy. “However, it helps the organisation because they are able to procure requisite and trained people.”

According to the fourth annual temp salaries primer report, compiled by staffing solutions company TeamLease Services, Bangalore, Mumbai, Kolko
ta and Delhi pay the best salaries in temping, with Bangalore paying the most in IT and HR, Mumbai in engineering and Delhi in sales.

Ahmedabad, Bangalore, Mumbai and Delhi offer the best wage hikes.

However, the positive aspect of the slowdown is that many organisations in the country have been able to control high attrition rates, which prevailed across sectors like IT/ITes, banking, financial services and retail.

Analysts say less productive employees seem to be getting removed, while those with proven capabilities would be valuable to the employers. Firms will find it easy to narrow down on requisite talent.

“History shows that in turbulent times demand for temporary workforce grows steadily. This is quite contrary to the perm business where only critical positions are hired irrespective of the economic barriers. As the global economy gains traction, we will see employers regain confidence and become more willing to add permanently to their payrolls,” says a Manpower India spokesperson.

Courtesy: Times of India

Hiring, attrition come to a halt

MUMBAI: It’s confirmed now. At the annual national human resources (HR) conference organised by SIES college of management studies (SIESCOMS), H
R managers across industries told ET that recruitment has come to a virtual halt.

Larsen & Toubro’s HR manager Karthik Narendra said, “We are only recruiting in our power business since it is an emerging sector. Recruitment for all other businesses has stopped. We are engaged in more internal reshuffling, to try and promote talent in-house.”

Voltas has also stopped recruitment as a result of the recent global financial meltdown. “The services sector has been hit badly by the recent meltdown. We have stopped recruitment but are engaged in training the talent that we have,” said a senior official at Voltas.

High attrition rates, a problem that was prevalent across sectors is no longer a serious issue for HR managers. With many companies laying off people to cut costs, those who haven’t been giving the pink slip are holding on to their jobs.

Ispat Industries, which was hit badly in the recent crisis, is fine-tuning its operations and is trying to cut costs. Ispat Industries human resources director B R Singh said, “We used to hire trainees every year from campuses which we have stopped. We are instead focusing on driving and motivating our workforce. Earlier, with many new plants starting, retention was an issue, but not any more.”

Johnson & Johnson, one of the largest global healthcare company, hasn’t been hit as much, according to Asia-Pacific regional head for labour and employee relations Vikas Shirodkar. He said that attrition will continue because people still want better salaries.

“We are trying to cut discretionary expenditure like travel and conferences. Unlike others, who won’t be hiring this year, we will continue to hire 20-25 students.

T V Rao, a management consultant said, “Instead of halting recruitment and firing people, companies can look at this as a time to indulge in more corporate social responsibility initiatives. Also, if they lay out the problems to the employees and ask for suggestions it will generate goodwill and loyalty. Employees might also be willing to take a temporary pay cut rather than face losing their job.”

Courtesy: Times of India

Job referrals: New hiring mantra

NEW DELHI: While campus recruitment continues to be the dominant mode of recruitment, IT/ITeS companies have substantially ramped up hiring thro
ugh employee referrals and internal promotions.

This could be the fallout of slow hiring phase that most companies are going through.

The slowdown has also led organisations to take stock of the situation and restructure their working conditions. The hiring plans in the IT/ITeS have been attracting much attention, since they are associated with massive hiring of fresh talent.

“Now, almost 40 per cent hiring is through employee referrals and 80 per cent of our promotions are internal,” says Genpact senior VP and HR head Piyush Mehta. “We are more inclined towards it, as apart from saving time on comprehensive background checks and scanning, it also helps in better camaraderie among employees.”

When a candidate is employed through a referral programme, there is a less probability of the candidate leaving the organisation in a small span of time--a fact well established at Genpact, which has a low attrition rate of 25 per cent. That apart, hiring through referral route also saves time searching, headhunting and calling candidates.

Recruiting people and retaining them is becoming a challenge for the HR departments across sectors. In such a scenario, IT/ITeS industry has chosen this mode to ensure effective hiring. “There has been an increase in hiring through employee referrals by 50 per cent across sectors, and at all levels,” says Expertus (a talent management and recruitment firm) sales and marketing VP A Sudarshan.

“The IT/ITeS sector takes the lead in it. At a time when most companies are looking at cost-optimisation, it is a definite tool of cutting on expenses, but it has an adverse impact on head-hunting and recruiting firms like us.”

There are monetary and intangible benefits for employees in case the referred candidate is finally selected. To ensure a successful referral sy
stem, it is important to suitably award employees who are bringing candidates. This is a strong motivating factor. MindTree Consulting, for instance, has an employee referral scheme ‘Each one bring one’. Infosys BPO is also focusing at maximum recruitment and promotions happening internally.

“It also helps in developing employee relations as the employee’s social needs are met and they have a feeling of belongingness,” says Gurukulonline Learning Solutions CEO Shailesh Mehta. However, headhunting and recruitment firms should not be affected to a major extent as there is always a skill gap or difference between the goals of the organisation and the personal goals of an employee.

“Although, there is rampant internal hiring, especially in the IT/ITeS, there would always be a need for specific talent and cross-border appointments. In such cases, it is necessary to leverage on expert recruitment and hiring firms,” said Mafoi management consultants CEO E Balaji.

Courtesy: Times of India

‘When others fire, you hire'

MUMBAI: As the competition hands out pink slips in a down economy, organisations should take advantage by hiring people. “Really good ones are b
eing laid off during times of recession,” says Robert Miller, co-founder of Miller Heiman and a renowned global sales practitioner.

“It’s the hard truth,” he continues. “No company has ever been able to achieve long-term success on the basis of budget cuts. Every business that succeeds over the long haul knows that it needs to invest in order to grow. As the saying goes, you have to spend money in order to make money.”

Bob, as he is fondly called, was in the city to address corporate chieftains, HR and sales workforce on strategic selling in the global economy at the Indiatimes Strategic Summit.
With over 40 years of experience in sales, consulting, and executive management, Bob and his team have helped clients succeed in the sales arena.

The recognised expert in complex sales management said, “Leaders need to think twice before cutting back during a recession. In particular, the benefits of any layoffs can be deceptively elusive.”

Citing an example, Bob spoke about the early 2000s, when Bain & Company conducted a study of the S&P 500. It found that, among companies that had similar growth rates, those that had small or no layoffs during a downturn tended to substantially outperform those that had larger layoffs.

“The reason is simple: because recessions typically last less than a year, so any short-term wage savings obtained from a large layoff are more than offset by the considerable cost of severance packages, any subsequent declines in productivity, and the expense of rehiring and training employees once the economy rebounds,” says the expert.

Undoubtedly its a grim scenario, when prices rise, factory orders drop, unemployment surges and other economic indicators signal rough times. It is then that corporates need to redouble their efforts. A slow economy is an excellent opportunity to improve the quality and size of not just your sales force, but your key people.

“Double up your efforts to get people on the street and capitalise on the strength of your executive team,” he adds.

In the country for the first time ever, Bob Miller, who has developed and introduced Strategic Selling some 30 years ago, said his passion was to elevate the role of the sales profession.

His mentorship drives innovations in sales performance that are consistent with the vision for the company he started three decades ago.

“There are three stages to a downturn,” Bob said, looking dapper in a dark blue suit teamed with a sky blue shirt. “When there are storm clouds on the horizon, as the first signs of trouble appear; when it is wet and rainy weather, when sales plunge; and when the first rays of sunshine appear, when customers start to increase their buying again.”

Studies have found that at each of those stages, companies tend to do exactly what they shouldn’t. In stage one, executives try to exude confidence that their company will be okay (so as not to frighten employees).

In stage two, they slash costs like crazy, often laying off employees and cutting back on the quality of their products or services. And in stage three, they spend freely, partly to try to make amends to alienated employees and customers. All of that might sound reasonable, but studies have revealed that companies that have been better at weathering the downturns tend to do just the opposite.

In stage one, they start battening down the hatches by letting staff know of their contingency plans. In stage two, they treat employees and customers like partners

Courtesy: Times of India

AIG CEO's salary is $1; no pay hike for top executives

NEW YORK: Troubled insurance giant American International Group In (AIG), for which the US government doubled the rescue package to USD 150
billion earlier this month, on Tuesday said that its CEO would get a salary of only one dollar and there would be no pay hikes for its top executives through 2009.

Separately, leading German reinsurance company Munich Re said that it is interested in buying the life insurance business of AIG in Asia.

Announcing compensation restrictions that go beyond the government's directive as part of its bailout package, AIG said its CEO Edward M Liddy would be given an annual salary of just one dollar in 2008 and 2009.

There would also be no annual bonuses in 2009 and no salary increase through 2009 for AIG's top-seven-officer Leadership Group, AIG said.

Besides, AIG has decided against no salary hike through 2009 for the 50 next-highest executives, in addition to bonus, severance and retention award restrictions.

AIG, for which the US government on November 11 nearly doubled the bailout package to 150 billion dollars from 80 billion dollars previously, is planning to sell some of its assets, including life insurance business in the US, Europe, Latin America and Japan, to recover from a financial mess.

Announcing the pay restrictions for its executives, AIG also said that it is developing a funding structure to ensure that no tax payer dollar is used for annual bonus or future cash performance awards for AIG's "Senior Partners," or the top 60 management people.

Commenting on the move, AIG Chairman and CEO Liddy said, "AIG's senior executives recognize AIG's obligation to tax payers.

"We are extremely grateful for the assistance we have received, and we know we have an obligation to use hat assistance to help AIG recover, contribute to the economy and repay tax payers," Liddy said.

The initial compensation for Liddy, who joined AIG on September 18, will consist entirely of equity grants, showing his confidence in AIG and its team.

While he would not receive an annual bonus in 2008 and 2009, he might be eligible for a special bonus for extraordinary performance payable in 2010Liddy will also not be eligible for severance payments.

Besides, Paula Rosput Reynolds, Vice Chairman and Chief Restructuring Officer, who joined AIG in October, will receive no salary or bonus in 2008. In 2009 and beyond, other than her base salary, any other compensation she receives will be tied directly to the progress of the restructuring efforts.

The other five members of AIG's top-seven-officer Leadership Group will not receive annual bonuses for 2008 or salary increases through 2009.

AIG's Senior Partners will not earn long-term performance awards in 2008 and they will not receive salary hikes in 2009, and their 2008 and 2009 annual bonuses will be limited.

Besides the restriction against any severance payment for the CEO, there will be restrictions on severance payments to members of the top-60 management members.

Courtesy: Times of India

More working hours for techies

BANGALORE: Technology firms are increasing working hours and monitoring the hours worked far more rigorously than ever before in a bid to squeez
e more out of employees in these difficult times.

Some are even going to the extent of checking the recess hour of their employees, to make sure that lunch sessions and coffee breaks do not cut into their per-day productivity.

TCS has recently increased the working hours by an hour a day to 9 hours. From January 1, 2009, Accenture India will do the same, becoming perhaps the first MNC company in India to move to longer working hours.

Wipro employees already put in 9.5 hours (8.30 am to 6pm) a day including a brief lunch break, while it's 9.15 hours in Infosys. But these weren't implemented stringently; until now.

“It's sort of mandatory for us now to put in 9.5 hours of work a day. Our HR seems to be monitoring it very closely these days and even a 15 minute shortage/delay is being noticed,” said a Wipro employee who got a reminder for short-swiping a few days ago.

Infosys Technologies head (HR) T V Mohandas Pai said the company has stringent measures to make sure employees put in the required 9.15 hours every day.

An increase in working hours will directly impact productivity and revenues. For instance, by increasing work hours by an hour a day an employee works an additional 22 hours a month. If an hour of his/her work is billed at $20, the company makes an additional billing of $440 per employee. That means, in rupee terms, a single employee can bring in additional revenues of Rs 22,000 a month for the company.

Such work time extension works well for projects that are on what is called the ‘time & material' model. Around 70 per cent of tech projects are currently under this model, while the rest are fixed price projects where the service providers may resort to pruning the size of teams to bringing cost down.

“Companies, by and large, are targeting a per employee productivity enhancement of 15 per cent,” said a strategist working with an MNC firm. Employees are, understandably, unhappy. “Some people are good and are capable of finishing even the extra work that is given to them in 8 hours. So they are wondering why they should hang around for 9 hours,” said an employee of Accenture India.

Courtesy: Times of India

Citigroup to slash 52,000 jobs to reduce costs by 20 per cent

Courtesy: Times of India

NEW YORK: Vikram Pandit-led financial services giant Citigroup has said that it will cut more than 52,000 jobs in the coming months and reduce expenses by 20 per cent in 2009. ( Watch )

Citi said it intends to reduce the total head count to less than 3,00,000 in the near term as part of the plan. The financial services behemoth had a workforce of 3,52,000 in the third quarter of 2008.

"The head count is expected to be down 20 per cent in the near term from peak levels," the company said today.

Aiming to have less than 3,00,000 people, Citi would have to cut over 52,000 jobs.

The plans to be discussed in the meeting with Citi staff in New York today are posted as a power point presentation on the company's website.

The firm, which has been severely battered by the financial crisis, has incurred huge losses in recent quarters. In the third quarter, Citi had a loss of USD 2.8 billion.

In terms of expenses, the financial services major aims to save USD 50 billion to USD 52 billion in 2009.

"Expenses are expected to be down 20 per cent from peak levels," the firm led by India-born Pandit said.

However, Citi pointed out that underlying business remained strong and that revenues were stable.

At the end of the fourth quarter of 2007, the company's head count stood at 3,75,000.

In the first three quarters of this year, the company has reduced its workforce by about 23,000 persons.

Earlier today, television channel CNBC in a report on its website, quoting people close to the company, reported that job cuts might go up to as high as 50,000.

"These people say these cuts will occur in a relatively shorter period of time, such as over the next five or six months," the report noted.

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Courtesy: The Independent

Citigroup, the ailing US financial giant, shocked the market yesterday by announcing that it would cut 52,000 jobs by the second half of next year.

The planned 15 per cent cut in staff numbers comes on top of 23,000 jobs already axed since the bank's employee numbers peaked at the end of last year and are designed to cut costs by 20 per cent to about $50bn (£33.3bn). The bank warned that London and New York would inevitably bear the brunt of job cuts.

Sir Win Bischoff, the bank's chairman, admitted that, along with other banks, Citi had hired too many people during the long credit-driven boom and predicted a wave of cuts by financial services companies.

"What all of us have done – and perhaps injudiciously – we've added a lot of people over ... this very benign period," said Sir Win. "If there is a reversion to the mean ... those job losses will obviously fall particularly heavily on the financial sector. Certainly they will fall particularly heavily on London and New York."

Citi, which operates in more than 100 countries, employed 352,000 people worldwide at the end of September and has more than 11,000 staff in the UK, including many big-spending investment bankers. Vikram Pandit, the bank's under-pressure chief executive, said yesterday that the total number of employees would shrink to about 300,000 by the end of June.

Mr Pandit announced the cost-cutting measures at a "town hall" meeting for staff designed to set out a clear direction for the financial conglomerate, which has suffered big losses from exposures to debt securities and rising bad debts. Mr Pandit, who took over in December after his predecessor Chuck Prince was forced out, has faced investor attacks for not getting a firm grip on Citi's sprawling global empire.

About half the 52,000 cuts will come from sales of businesses, with 18,000 already in the pipeline from the sale of Citi's German consumer bank and an Indian outsourcing operation. The remaining cuts of about 25,000 are likely to include forced redundancies and to be heavily weighted towards investment banking, particularly businesses such as fixed-income which lie at the heart of the credit crisis.

A Citi spokesman yesterday declined to comment beyond Mr Pandit's presentation to staff.

Market observers expect further big job cuts in financial services, a key driver of the UK and US economies, as a sharp recession and the credit crisis weigh heavily on the once-booming industry. The Centre for Economics and Business Research predicts a loss of 62,000 City-related jobs in the UK by the end of next year from 2007's peak of 352,000 with big knock-on effects for other sectors.

Shaun Springer, chief executive of the City recruiter Napier Scott, said: "This is both a reaction to the paucity of profit this year and a proactive assessment of business next year. If there is little business to be had at Citi, that is a pretty fair reflection of top-tier financial institutions in general."

Citi shares shed 19 per cent last week, falling below $10 for the first time since its formation from the merger of Travelers Group and Citicorp in 1998.

Citi was already under fire from investors before the credit crunch started due to out-of-control costs and a series of mishaps across its network. Sir Win signalled yesterday that Citi's bosses would follow Goldman Sachs and UBS by going without bonuses for this year. "Watch this space," he said.

Mr Pandit has faced calls for Citi to be broken up but, though further minor disposals are in the pipeline, he defended the company's "global universal bank model", telling staff that the core strategy remained unchanged. He also highlighted the bank's strong capital position after the US government's $25bn injection, bringing Citi's tier one ratio to 10.4 per cent, just behind JPMorgan and ahead of Bank of America and Wells Fargo on 9.8 per cent each.

The bank's job cuts are already bigger than any other financial institution, according to Bloomberg. UBS, Merrill Lynch and Wachovia have all revealed more than 5,000 job reductions.

The bank has lost about two-thirds of its market value this year after four quarterly losses totalling $20bn. The bank's shares lost a further 6.6 per cent yesterday, closing at $8.89. Citi was last week forced to deny reports that Sir Win, the City grandee, had lost the confidence of some of the bank's directors.

Banks and brokerages worldwide have announced more than 200,000 job cuts since the credit crisis started in August last year. Goldman Sachs is cutting about 3,200 employees, or 10 per cent of its workforce.