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Indian outsourcers feeling the heat - Updated with numbers

The Times of India is reporting that TCS, the largest Indian outsourcer, is laying-off almost its entire marketing team in London along with a large percentage of their high-end consultants. The CEO has officially declared that there won't be any salary hikes & that emphasis would be more on employee efficiency, a management-ruse for laying-off people

To the best of my knowledge, the same is happening everywhere in Indian IT sector - companies are being forced by clients (especially & unsurprisingly, those in the BFSI) to reduce their billings by 15-30% as well as move more work off-shore

Most of Indian vendors have a significant staff on bench and hence, they are being forced to take drastic measures like reducing the (variable) components of salaries, not allowing onsite staff to take leave, etc.

This, coupled with the fact that US is increasing curbs on outsourcing, is creating a panic situation among Indian vendors. While companies like Mphasis have recorded robust results for Q1, 2009, I believe that it is more due to the lag between customers cracking the whip & vendors falling in line

So, is the honeymoon over for Indian outsourcing juggernaut? It is difficult to hazard a guess at this juncture, considering that the US economic recession has still not entered its trough. However, it is safe to say that the market has become buyers' market & is likely to remain so in the medium-term future, say 5 years from now

Note: This commentary first appeared at

Update: The following is the approximate no. of layoffs done at various companies in India:

  1. Capgemini - 2000
  2. Hexaware - 500
  3. HCL - 450
  4. Mastek - 425
  5. Patni  - 400
  6. Motorola  - 300
  7. Infosys  - 180
  8. Sun  - 150
  9. TCS  - 130
  10. GlobalLogic - 125
  11. Yahoo  - 45  

In all, a total of 4705 retrenchments have already taken place in the Indian IT sector...


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