Satyam shares drop on job cuts

Satyam Computer Services Ltd, India’s fourth-largest software services provider, was poised for its biggest drop in five years after a report that the company may fire about 9 per cent of its employees.

Satyam, which fell as much as 12.8 per cent in Mumbai trading, the most since April 2003, was 9 per cent down at Rs 371.5 at 11:16 am. Satyam led a decline in technology stocks on concerns that the deepening credit crisis in the US will force clients to cut back on orders further.

Hyderabad-based Satyam and larger rivals Tata Consultancy Services Ltd and Infosys Technologies Ltd in July reported first-quarter profit growth slowed as Wall Street clients reduced orders and delayed new contracts. Since then, the deepening crisis has forced the US Treasury to take over mortgage lenders Fannie Mae and Freddie Mac and losses and writedowns at financial firms have crossed $500 billion.

Lehman Brothers Holdings Inc, once the fourth-largest US investment bank, intends to file for bankruptcy after Barclays Plc and Bank of America Corp abandoned talks to buy the crippled firm.

Bank of America plans to acquire Merrill Lynch & Co, the world’s biggest brokerage firm, for about $50 billion.

Satyam may cut as many as 4,500 jobs, the Economic Times reported today, citing unidentified people.

As part of its appraisal process, Satyam identifies “around 5 percent” of its employees for “performance improvement,” the company said in an emailed statement. About half of them leave “either voluntarily or involuntarily,” Satyam said, adding the company had completed its latest appraisal a few weeks ago.

Tata Consultancy Services is gearing up to another round of layoffs.

According to a recent report Asia’s largest software exporter, Tata Consultancy Services is gearing up to another round of layoffs. The company also plans to discourage employees from staying on bench for more than two months on any of its centres.

Incidentally, the company had also fired close to 500 employees, citing poor performance after its annual appraisal. It was also among the very first companies to announce a cut in the employee variable pay across the board.

The company which sees some project delays this quarter, but no cancellations, terms this as an employee utilisation exercise. The process will involve counselling employees and training them. Employees would be asked to undertake projects on which they have never worked on and will have to update their skills.

Recently, TCS also retrenched 15 employees from its Australian subsidiary. Interestingly, last month too, the company had shown door to some 25 employees from its Kolkata and Bangalore centers for fudging CVs.

By June-end, the total employee strength TCS stood at 116,300, across 64 countries. The company hired 8,982 employees in the first quarter.

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Patni cuts off workforce by 3%

In July, Mumbai-based Patni Computer Systems too gave pink slips to 400 employees on grounds of non-performance.

Terming it as a routine exercise and not a slowdown setback, country’s sixth-largest exporter said that it is an effort to weed out non-performers.

Rajesh Padmanabhan, vice-president and head, global HR, Patni, said, “This is an absolutely regular appraisal that is important for any performance-driven organisation. It is something standard we do every year. Employees who have got 0-1 rating on a scale of 5 typically form the basis for the first-level shortlist. These are performance-based resignations; we’ve not issued any termination letters.”

However, industry sources reveal that the laid off employees included several project managers as well. Incidentally, while in case of TCS, the retrenched number was about 0.5 per cent of the workforce, for Patni, it made for closer to 3 per cent of the 14,800-strong workforce.

Narendra K Patni, Chairman and CEO, Patni Computer Systems said, “The overall market environment remains challenging with prevailing global uncertainties. We are cautious in our short-term outlook but remain positive on long-term prospects and are continuing our investments in identified areas.”

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