BENGALURU: Top executives in the ranks of executive VP and senior VP in Tech Mahindra have offered to take a pay cut of 10%-20% because of the company's lacklustre performance over the past few quarters.
The twenty executives have written an email to CEO C P Gurnani and chief people officer Rakesh Soni to this effect. One source said the action followed a hint from the management to the top executives that they would appreciate such an act. The pay is expected to be restored if and when the company's performance gathers some steam.
9 technology companies in India that cut jobs in 2017
9 technology companies in India that cut jobs in 2017
The year 2017 seems to have started on a harsh note for the technology sector in the country. With funding drying up and global political changes, many startups and technology companies in the country are staring at an uncertain future, making them cut costs. This has resulted in pink slips across many of these companies. Here's a look at nine technology companies that cut jobs this year.
Four months after Chinese billionaire Jia Yueting acknowledged his company LeEco was fast running out of cash, the erstwhile high-flying company has fired 85% of its India staff and allowed two leadership exits in what the industry says is a precursor to its eventual withdrawal from the South Asian nation. Industry executives attributed the likely exit to the financial crisis at the parent firm and its decision to focus on China and the US.
In February this year, cellular services major Aircel reportedly gave pink slips to 700 of its employees -- around 10% of its pan-India staff strength - in its first stage of manpower downsizing amid a huge wave of consolidation that is going to engulf India's telecommunication sector. Aircel has around 8,000 employees in India.
Late last month Indian e-tailer Snapdeal confirmed that it is cutting jobs, but declined to specify the exact number of employees affected by the decision. The news comes as the Gurgaon-based company looks to turn around its fortunes after a dismal 12 months. Separately, in an internal email sent to employees, the SoftBank, Foxconn and Alibaba Group-backed company's founders, Kunal Bahl and Rohit Bansal, have pledged not to take a salary, for an unspecified period.
Fashion retailer YepMe recently laid off an unspecified number of people from its warehousing and quality control teams. Vivek Gaur, founder of YepMe told TOI, "We were planning to break-even in January. But demonetisation hit, (the option for cash payments on delivery) disappeared and sales were down. We decided to move our focus outside of India." The company recently began operations in the United Kingdom. "In India, we decided to recalibrate the business and decided that the best thing is to outsource certain functions," he added.
The ethnic fashion website Craftsvilla reportedly laid of hundreds of employees recently. "(Craftsvilla) has laid off more than 100 staffers in recent weeks, including its entire product and technology teams and most of its operations and marketing teams," a former senior executive of the company told ET.
Payment gateway PayU India recently dropped plans to launch a credit card product. This reportedly resulted in the company handing out pinkslips to its its 85-member call centre team and collection team of 25.
Industrial marketplace Tolexo is recently laid of about 50 employees. The job cuts come as the company integrates its teams with parent IndiaMART. Some reports also put the number to 300. "Tolexo as a platform had been taking orders from retail as well as wholesale customers, but since we realised that our value proposition is strongest for wholesalers, we have decided to focus only on this segment," CEO Brijesh Agrawal.
Internet company Girnar Software, which runs auto portals CarDekho.com, Gaadi.com and Zigwheels.com, recently cut over 100 jobs as part of a restructuring exercise to cut costs. The company, which has been on an acquisition spree over the past two years, is said to be cutting the jobs in order to keep its commitment to the board to become a profitable firm by the first quarter of the next fiscal and reduce "dependence on external investor funds".
Homestay startup Stayzilla recently shut down operations. The Chennai-based online hotel aggregator failed to raise a fresh round funding of $20 million. Started in 2005, the company was among one of the earliest hotel room aggregators in the country. The company let go of its 210-member team. In a blog post, Stayzilla CEO and founder Yogi Vasupal wrote this: “I would like to announce today that we would be bringing to a halt the operations of Stayzilla in its current form. This has been one of the toughest decisions that I have taken so far but it is the right thing to do.”
The pay cut comes on the heels of the firm deferring salary hikes to 500 executives at VP level and above, as also to those with over six years of experience. An email to the company on the matter did not elicit a response.
Across major IT services firms, top executives are under pressure. Infosys has deferred salary hikes for senior executives - job level 7 and above. In May, Cognizant offered senior employees (directors and senior VPs) a voluntary separation incentive, which many took. The industry is trying to manoeuvre through two difficult and simultaneous challenges - a slowdown in IT spends, and clients' desire to move to new digital technologies. These require a significant refreshing of talent.
Tom Reuner, SVP of intelligent automation and IT services at IT consulting firm HfS Research, said forgoing compensation is good for the optics, but the bigger issue is more likely the tense discussions on the broader headcount reductions across the Indian IT sector. "It is too early to extrapolate a trend from the recent reduction in the workforce at Tech Mahindra and some of its peers, but the secular shift toward digital and automation will be a challenging period of transition," he said.
Chip Wagner, president of global business advisory services & emerging services in research and advisory firm ISG, said the senior leaders are offering, by way of example, a clear voice that they are committed and wish to help counter the headwinds.
Junior level employees are often seen as soft targets for companies. Tech Mahindra is learnt to have recently laid-off about 1,500 employees, or close to 1.2% of its workforce. Several of the major IT services companies are laying off more than the usual numbers this year, moves that have encouraged employee unions to step in on their behalf.
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