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Rampant lay-offs: When will the tide turn for India Inc's job market?
At a time when there are lay-offs happening in almost every sector in India, human resource professionals are pinning hope of some revival after a few quarters. Find out what Shyamal Majumdar has to say about hiring scenario in India.
Leading recruitment consultants seem to have “Modi-fied” their opinion, with a spate of surveys talking about a pickup in India Inc’s hiring plans compared to just three months ago.
No one can blame the consultants. They are merely parroting what their clients are saying — that things can’t get worse than this and hence the tide could turn under a Narendra Modi-led government.
But it was ironic that the latest survey talking about India Inc’s “bullish hiring plans” came on a day when two of India’s largest companies made headlines for reducing their workforce in the interests of cost-efficiencies against the severe slowdown.
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Rampant lay-offs: When will the tide turn for India Inc's job market?
A Bloomberg report on Tuesday quoted P K Mukherjee, executive director of the iron ore business of Sesa Sterlite, as saying India’s biggest iron ore exporter plans to reduce its workforce in Goa 40 per cent (1,000 of its 2,500 workers) to cope with spiralling costs and negligible business.
The company, which had 4,000 workers before the ban, has reduced temporary staff by 1,000 and cut 50 managerial jobs. Not a single engineer has been hired in two years and most foreign travel has been halted.
The trade unions have said nothing beyond requesting companies to show more empathy for workers.
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Rampant lay-offs: When will the tide turn for India Inc's job market?
The same day, a Financial Express report said close to 600 permanent employees at Tata Motors had accepted an early retirement offer, which the company says addresses its concerns on headcount and cost.
Tata Motors has seen its domestic operations under pressure for several quarters now — in the second quarter of FY14, it posted its first overall profit in a year owing to the strong performance at Jaguar Land Rover, but the domestic business made a net loss of Rs 804 crore ( Rs 80 billion)
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Rampant lay-offs: When will the tide turn for India Inc's job market?
These twin headlines came a few days after State Bank of India, the country’s largest bank, said that it may go slow on recruitments over the next two to three years.
The bank, which expects its employee strength to fall to 220,000 this fiscal from 223,000 at present, doesn’t want to increase headcount to avoid productivity and expense from becoming issues.
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Rampant lay-offs: When will the tide turn for India Inc's job market?
Job cuts also arrived at multiple IBM locations in India and hundreds of layoffs are expected in the coming days.
There are stories galore about the clinical “cut and exit” treatment meted out to employees at IBM’s Systems and Technology Group (STG) in India. Several employees wrote and berated the management on the union website. “You treated Indians like resource widgets. These people are human beings,” said one angry posting by Solidarity4IBMIndia.
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Rampant lay-offs: When will the tide turn for India Inc's job market?
And then there were examples of Tata Steel informing the Bombay Stock Exchange about a proposed restructuring in its European subsidiary that could lead to the loss of around 500 jobs.
Education service provider Educomp has slashed 3,500 jobs, truncating its workforce by almost 20 per cent.
Even the consumer goods space isn’t unaffected. For example, in the tax-free zone of Baddi, manufacturing activity has fallen by about 30 per cent in the past six to eight months with consumers cutting back on consumption and non-essential purchases.
For those who are bullish on the information technology space, listen to what Infosys MD S D Shibulal said on Wednesday.
Speaking to investors, Shibulal said the factors that led to the slowdown in customer sentiment in the fourth quarter may continue in at least the initial part of the next financial year.
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Rampant lay-offs: When will the tide turn for India Inc's job market?
If all these are the largest companies in their space, the story is no better in the construction sector, India’s second largest employer. Thousands of contract workers have lost their jobs. For example, in the roads sector, highway projects for about 2,500 kilometres, valued at about Rs 25,000 crore (Rs 250 billion), are stuck.
Every 100 km of roads would have employed 1,000 people, so 2.5 million workers are affected.
In a Business Confidence Survey Ficci conducted some time ago, 65 per cent of the participants indicated no fresh hiring over the first two quarters of 2013-14. Nothing has changed after that — except, of course, the hope that things will improve.
A leading banker says all this talk about India Inc shaking off its hiring inertia is a lot of hot air, since it assumes that there will be a stable government at the Centre, following which the country will see a flood of investments and reforms across sectors. “It’s all in the realm of probability at this point.
What I know is that my fresh loan pipeline is dry and so I have to keep my costs in check for at least one more year. And therefore, it’s strictly replacement hiring for me at least a couple of quarters more.”
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Rampant lay-offs: When will the tide turn for India Inc's job market?
If all these are the largest companies in their space, the story is no better in the construction sector, India’s second largest employer. Thousands of contract workers have lost their jobs. For example, in the roads sector, highway projects for about 2,500 kilometres, valued at about Rs 25,000 crore (Rs 250 billion), are stuck.
Every 100 km of roads would have employed 1,000 people, so 2.5 million workers are affected.
In a Business Confidence Survey Ficci conducted some time ago, 65 per cent of the participants indicated no fresh hiring over the first two quarters of 2013-14. Nothing has changed after that — except, of course, the hope that things will improve.
A leading banker says all this talk about India Inc shaking off its hiring inertia is a lot of hot air, since it assumes that there will be a stable government at the Centre, following which the country will see a flood of investments and reforms across sectors. “It’s all in the realm of probability at this point.
What I know is that my fresh loan pipeline is dry and so I have to keep my costs in check for at least one more year. And therefore, it’s strictly replacement hiring for me at least a couple of quarters more.”
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Rampant lay-offs: When will the tide turn for India Inc's job market?
Larsen & Toubro Chairman A M Naik says infrastructure projects worth Rs 8.75 lakh crore and investments to the tune of Rs 2.5 lakh crore (Rs 2.5 trillion) are stuck and manufacturing, which accounted for 17 per cent of the gross domestic product a couple of years ago and is now down to 13 per cent.
He also points to India’s import basket, which comprises boilers, turbines, electrical equipment, nuclear inter-boiler and project goods. “If this equipment were manufactured in India, tens of thousands of jobs would have been created. For every billion dollars in trade deficit, 50,000 jobs are lost.”
If the head of one of India’s largest manufacturing firms says this, one can well imagine the fate of the target set by the 12th Plan — generation of 100 million additional regular jobs in manufacturing over the next 15 years, which would double the share of manufacturing employment to over 22 per cent of the labour force. One can only live on hope.
