Search the Internet          Tips  Sites: Finance, Investment

Bangalore sings slowdown blues in low key

Bangalore, India's Silicon Plateau, is in the throes of anxiety. Soaring property values and hordes of yuppie technicians making it big seemed too good to last. Bangalore is now haunted by the fear that a boom in software services would be threatened by global downturn in infotech spending.

Leading Indian software companies such as Infosys Technologies, whose sales had doubled annually the past five years, suddenly are forecasting growth of just 30 per cent this year.

To cope, many companies have clammed down hard on spending. Trigyn Technologies, whose clients include Hewlett-Packard and Nokia, has frozen hiring unless linked to specific projects, closed some US offices and slashed top executives' salaries by 50 per cent.

Mascot Systems Ltd, another software services firm, has taken similar action. "We've frozen salaries at current levels and any increase will be linked to company performance."

Few companies have laid off workers, but primarily because of India's stiff labour laws.

"We can't use the term layoffs in the Indian context," said the head of one Indian software company, speaking on condition of anonymity. "If I try layoffs, I have to pay 50 per cent of the wages."

The fact Indian engineers typically earn only a fifth of what their US counterparts get has also made layoffs less necessary, industry officials say.

But fewer companies are still willing to hire enough staff to also have some engineers and programmers sitting "on the bench", ready to respond to an increase in orders.

Now the waiting is of a different sort.

"Almost everyone has sort of frozen new recruitment," said N Muralidharan, managing director of Jobstreet.com's India unit said. "Most are in a wait-and-watch mode."

The hiring freeze is having a big effect on employment conditions and employee mentality.

Fewer companies offer stock options and mid-year salary hikes, common incentives for retaining talented employees during the freewheeling Internet boom. There is less need as software workers themselves embrace the concepts of loyalty, security and long-term prospects.

Job-hunting is on the rise, but is often motivated by the search for safer havens, particularly among junior workers.

"There is a great feeling of insecurity among employees in terms of the environment," said Nathan S V, the top personnel manager at Internet technology firm Planetasia.com, who said he was hiring only senior managers.

Not all is grim

But expansion and new hiring certainly has not come to a complete stop, especially in firms building future technologies.

Telecoms equipment maker Lucent may be slashing 10,000 jobs in the United States, but this week it announced plans to hire 500 in Bangalore, mainly to aid wireless and optical technology work.

And R Vidyasagar, head of human resources at financial software product firm i-flex solutions, said he was still hiring actively.

Growing orders from Europe too is offering succour to Indian software firms in the face of the volatile US market, which accounted for more than 60 per cent of India's $6.2 billion exports in 2000/01 (April-March).

Like numbers of other Indian software service companies, the Mascot spokesman said his company had recently opened offices in Europe -- in Belgium and Germany.

Tell us what you think of this report