IT job losses in India can top 50K in '09

Over 50,000 IT professionals in the country may lose their jobs over the next six months as the situation in the sector is expected to worsen due to the impact of global economic meltdown on the export-driven industry, a forecast by a union of IT Enabled Services warned.

"There would be 50,000 job losses (IT and BPO put together) over the next six months," Karthik Shekhar, general secretary of UNITES India, a politically neutral union of ITES professionals said.

The job loss in the IT and BPO sector in the country topped 10,000 in the September-December period, Shekar said.

While employees of medium-sized companies bore the brunt of job losses in the September-December period, it's going to be their counterparts in the big and small firms who would increasingly face the axe in the coming six months, he said.

UNITES India, affiliated to the global union United Network International, suggested that the companies in trouble could resort to salary and incentive cuts without trying to "squeeze" the staff, rather than adopting the "layoff path".

Employees are willing to take such cuts for 12-16 months till the demand picks up again, when such benefits should be restored to them.

Shekhar said senior officials of the industry had concurred with the figure of 10,000 job loses in September-December, stating that it accounted for "bottom five per cent of the performers".

Consultations with the union's counterparts in the US and UK suggested that slowdown would continue to hit the offshore sourcing space, he said.

He said factors like continued slowdown, likely "tax application" to companies outsourcing jobs under the new US regime and tightening in regard to H1B visas were among the key reasons cited for the acceleration in issue of pink slips.

Ambanis Preparing Layoffs

Recession may have just become a worry for Mukesh Ambani and Anil Ambani, brothers who own some of India’s most valued companies, too.

Sources tell Network 18 layoffs and cost cutting have been ordered in Reliance Industries Ltd. (RIL), owned by Mukesh, and the Anil Dhirubhai Ambani Group, which is owned by his younger brother Anil.

Sources say several senior and mid-management executives across the RIL group companies have been asked to leave. The company has scrapped plans for its semi-conductor business for now and the team for the project has been asked to leave, sources say.

CNBC TV 18's Executive Editor Shereen Bhan reports RIL’s official position is that three of its key projects—all related to its petroleum and gas business—are in the final leg of implementation. But the company makes no mention its retail business, which was seen as a growth industry but now may be scaled down because of recession.

Network 18 asked for a statement from RIL on whether it was downsizing and was told: "As a good corporate practice, we constantly examine our cost competitiveness and take appropriate measures regularly."

On layoffs in its management team, the company said: “Apart from normal attrition, we are not aware of several senior and management executives across the group (who have) been asked to leave."

Cost cutting “is a practice which is undertaken constantly at Reliance”. Asked whether it planned to put its semi-conductor business on hold for now, RIL said: “As a part of our business expansion, we continue to evaluate various long term potential business opportunities. As a matter of policy we do not comment on any business which is still in the evaluation stage.”

CNBC-TV 18’s Economic Policy Editor Vivian Fernandes reports that ADAG has laid off 6,000 people. The lay-offs cut across ADAG companies in life insurance, general insurance, mutual funds, commercial and consumer finance, and entertainment.

The job cuts have been implemented in all hierarchies: from marketing heads to middle management and lower management officials and customer executives.

Sources say ADAG has drastically pared its marketing team for life insurance in Mumbai and in Delhi it has been disbanded. Marketing budgets have been cut too.

The number might seem big, but not in relative terms as the life insurance business of ADAG employs about 30,000 people.

ADAG denied any lay offs or retrenchments. The company predicts that the next few months would be a high-investment season for tax saving products and it would employ up to 90,000 agents and sales representatives.

Auto parts: 200,000 may lose job; 4,000 units face closure

India's auto component makers are facing one of the biggest crises ever. With the domestic market in the doldrums and the exports to the American market badly hit, many companies are on the verge of shutting down.

The entire supply chain of auto companies is bearing the brunt of the economic meltdown. From Tier-1 companies to small-scale units, all are facing a huge fall in demand, delayed payments and a stiff liquidity crunch.

"About 4,000 ancillary units are on the verge of closure and about 200,000 people will be affected by this crisis. Most companies have cut down the number of shifts, working days and are cutting down production. The US crisis has aggravated the problem," says Anil Bhardwaj, secretary general, Federation of Indian Micro, Small and Medium Enterprises (FISME).

The commercial vehicle segment is the worst hit by the crisis. Such crises are cyclical, and tend to recur every 5-6 years, but a calamity of this magnitude has put all companies in trouble. "Auto component makers are hit very badly. The original equipment manufacturers (OEMs) have not been able to sell stocks. Cash flow is getting hugely affected. Payments are getting delayed, affecting a lot of projects. The overall sentiment is negative," says Jayant Davar, vice president, Automotive Component Manufacturers Association (ACMA).

Domestic woes

It all started with the crisis in the auto industry. Car sales, which were booming, have now plunged. In the wake of the marked economic slowdown, there is a severe credit crunch. This has, in turn, slowed down demand for vehicles.

"Payments to vendors are getting delayed, loans for capacity expansion are not being sanctioned, and banks are refusing loans to auto companies that are supplying to companies like General Motors, Ford, etc. The removal of insurance cover for exporters too has severely hit the industry," Davar explains.

The Chennai-based Sundram Fasteners [Get Quote], which supplies radiators caps and fasteners to General Motors, says it is more worried about India than the United States. "Most of the auto companies have done very badly in 2008. The business in the second half of the year has been 50 per cent less than in the first half," says V G Jaganathan, president (finance), Sundram Fasteners.

The US impact

The auto crisis in the US has only worsened the situation. Auto component makers' exports to the Ford, GM and Chrysler were growing at 50-70 per cent. Out of this 35-40 per cent of the exports were to GM in North America. GM accounts for about $500 million of India's auto component exports.

Exports from Indian companies accounted for over $3 billion last year. "We were expecting a 20 per cent year-on-year growth. But this year, this has drastically fallen to about 6 per cent. November and December were the worst months for auto component makers," says Davar.

The auto sector is amongst the worst-hit industry sectors. Adding to their woes is the cancellation of credit insurance which protects manufacturers against payment defaults from buyers.

The Export Credit Guarantee Corporation has frozen issue of fresh credit risk insurance (CRI) cover to Indian component vendors of US auto giants. "Auto component makers are coping with the double whammy of the domestic market and the export market," says Bhardwaj.

Meanwhile, GM India is playing down the impact of the parent company going under. "GM North America is in crisis while GM Europe has flat growth. GM Latin America and Middle East, and GM Asia Pacific are doing well. GM has already sourced components woth $500 million from India and it will meet the target of $1 billion by 2010, as other markets still need components," says P Balendran, vice president (corporate affairs), GM India.

For companies like Sundram Fasteners, the crisis will have short-term impact. "GM accounts for about 2-3 per cent of the total business. We will continue to outsource products. In case, GM files for bankruptcy, payments will be delayed. Bankruptcy does not mean closure, it is restructuring," says V G Jaganathan.

Big trouble

Sandhar Technologies, a diversified auto parts maker that has plants in the Europe, has seen a fall in business by about 50 per cent.

"The topline growth for Sandhar Tech has grown to Rs 800 crore (Rs 8 billion) compared to Rs 640 crore (Rs 6.4 billion) last year. But the bottomline growth has been severely hit. Steps taken by the government -- like Cenvat cut -- are just nominal. There is no liquidity in the market. With high auto loan rates and a scary job market, the last thing on anyone's mind would be to buy a car," Davar, who is also the CEO and founder of Sandhar Technologies, laments.

Auto component companies employ about 400,000 people. The small and medium enterprises in India employ about 3.3 crore (33 million) people. Many of these SMEs are in the auto sector. A good majority of them have already lost their jobs and the sector is likely to see more job cuts.

"Though the jobs cuts are not apparent, a large number of people have already been asked to leave. "Many ancillary units which supply to these companies are also likely to be wiped out if the crisis continues," Davar says.

Commercial and passenger vehicle sales have fallen drastically. Unless sales go up, the market will continue to be sluggish, says carmakers. Most of the companies were half way through expanding their operations and building new capacities. It is now a huge burden on these companies as they have to bear the huge interest costs and the defaults in payments.

Help us!

Many banks have refused to offer credit to companies who are supplying to GM. They fear that in the event of a bankruptcy, their payments will also get stuck. Many companies established auto plants in India to enjoy the benefits of the excise cut exemption. They have already invested huge amounts into these plants.

ACMA has asked the government to intervene and help the industry. There should be more liquidity in the system. Many banks have pulled back credit to auto companies. The interest rates have to come down to push sales. Auto companies badly need the ECGC cover. The government should look into these issues.

Auto crisis & GM India

The crisis will not have any impact on GM's India operations. The company's plans are going on as per schedule. "We will go ahead with our plans with internal approval so the crisis in the US will not affect us in India. GM is the only auto company which has seen consistent growth despite a fall in sales in November," says Balendran.

Optimistic even during the crisis, he says that GM India performed better in 2008 than it did in 2007. "In 2006, we sold about 35,000 units; in 2007, we sold about 60,032 units, while in 2008, we have already sold 72,000 units. It has been a steady growth," he says.

GM has inaugurated the engine plant at Talegaon, with a capacity of 160,000 units. This plant is expected to be commissioned in the year 2010. GM India is likely to hire 500 employees at the plant. GM has also started the engine power train facility with a capacity of 140,000 units.

"We have already hired 1,000 people and we will be hiring 500 more. We have no plan to cut production or cut costs. The reason for GM's success in India is the product line up. Starting from Rs 2.99 lakh (Rs 299,000), we have cars for every segment. We will be launching the new Captiva in January, a sedan called Cruze mid next year, and a mini car in 2009. The upgrades programme will also continue as planned," Balendran adds.

Bleak future

How long will the crisis last? There are no definite answers to this.

"We are hoping the situation will improve slightly in the Jan-Mar quarter. But if the recession worsens, it will only be tougher for companies to get going," says Davar.

GM India believes the situation will take many months to improve. "The slowdown has gathered pace in the last 3 months. The market is very sluggish. Liquidity is certainly a problem and it will take months to recover," P Balendran says.

"About 25 per cent of all companies in the small and medium enterprises, have already become 'non-performing assests (NPAs).' As the crisis worsens, 50 per cent of SMEs in the auto sector will end up as NPAs," says Anil Bhardwaj.

The FISME has said that these trying times should be converted into an opportunity to create a lean and powerful economy with sustainable growth.

In its memorandum to the Prime Minister Manmohan Singh, the association has sought several relief measures, including a moratorium on repayment and the allowing of corporate debt restructuring for all unit.

The association has also demanded that wrking capital limits of enterprises must be enhanced liberally and specific steps be taken to ensure timely payment to Micro, Small and Medium Enterprises (MSMEs) against supplies made to corporates.

A big push is needed for exposing SMEs to exports. Currently, 0.5 per cent of SMEs are engaged in exports and yet contribute to about 50 per cent of the exports.

There is a critical need to look beyond Export Promotion Councils and leverage resources of private organisations and associations focusing SMEs, the FISME has said.

Indian exporters lay off 65,500 employees - minister

Indian export companies, facing a slump in demand in the overseas markets, have laid off around 65,500 employees, a minister said on Monday.

A sample study of 121 firms for Aug-Oct 2008, conducted by the Department of Commerce revealed "loss in export orders to the tune of Rs 1,792 crores (17.92 billion rupees) and loss of jobs of around 65,500," Oscar Fernandes, labour minister told Parliament.

The minister was answering a question on how employment was affected by slow industrial development, closure of industrial units and global economic recession.

In a statement, Fernandes said the government has initiated several fiscal measures to instill confidence in the economy and spur growth.

"These measures will prevent large scale job losses," he said.

The survey included export firms from textiles, leather, engineering, gems and jewellery, handcraft, food and food processing, minerals and marine products sectors, he said.

Deutsche Bank to lay off its staff in India

Foreign lender, Deutsche Bank has started following the industry trend and is dismissing employees from its operations in India. However the bank did not unveiled any such news but a senior official connected with the bank revealed that many employees have been asked to quit jobs.

The bank is laying off the staff as a measure of its cost-cutting program. In fact a senior official from the bank informed that this decision was taken to "make minor adjustments in its human resources front".

The lender however remained mum on all the issues concerning the matter. He did not even disclose its current employee strength. According to the RBI data, the bank had 3,500 employees on March 2008. This figure had been increased from 2,250 in March 2007 and 678 in March 2006. Deutsche Bank has 11 offices in India and it supposed to turn off employees across all the branches. Besides there are also news that it is laying off staff at its Singapore operations.

This move by the German bank looks strange because it has recently injected a fresh dose of capital worth Rs 325 crore into its operations in India.

Earlier HSBC India had also unwaged employees from its broking house, Investsmart. It had also followed this as a practice of cost-cutting.

Global decline spells trouble for India's tech sector

The deadly terrorist attacks in Mumbai, India dominated the global headlines last week. What didn't get a lot of attention, though, was the reason behind the attacks.

The terrorists attacked the commercial heart of India — Mumbai's financial district. And I believe their purpose was to destabilize India's democracy and capitalist economy.

Yet ...

India's Economy was Struggling
Before Those Attacks!

The Indian economy expanded by 7.6% in the third quarter. And while that may sound impressive, it's the slowest pace in four years and well below the 9% growth it had averaged for the last three years.

The terrorists attacked Mumbai's financial district, the commercial heart of India.

India's exports contributed to that decline: down in October for the first time in seven years.

The International Monetary Fund (IMF) expects the Indian economy to continually slow down. And it recently reduced its growth forecast to 8% for 2008 and 6% next year.

In response, the Reserve Bank of India has been aggressively cutting interest rates in hopes of keeping its economy on track. In fact, it has cut interest rates three times since October for a total reduction of one full percentage point.

And much like our politicians, India's government is embarking on a stimulus-seeking spending spree. The dollar amount — $4 billion — is a far cry from the $7 TRILLION we're throwing into the U.S. economy. But it nonetheless shows that India shares our same slowdown worries.

Indian IT Companies Are Going
Through a Downturn of Their Own

Mumbai may be India's financial center, but the lucrative high technology center is in Bangalore.

Bangalore, the Silicon Valley of India, has become the world's back office.

Bangalore has become the Silicon Valley of India. It is the back office of the world, handling customer service calls, process payments, and writing the code that runs much of corporate America's software. And its high-technology companies and outsourcing firms are going through a downturn of their own.

The global slowdown is forcing them to reduce hiring, freeze salaries, postpone new investments and lay off thousands of software programmers and call center operators.

Three examples of Indian companies in trouble ...

Infosys: India's second-largest software services exporter gets two-thirds of its business from the United States. One-half of that is from financial companies, like Citigroup and Bank of America.

This could explain why Infosys recently scaled back its earnings projections for the year, telling investors that it expects revenue to expand 13% to 15% instead of the 19% to 21% it had previously forecast. That's way below the 30% growth of recent years.

Satyam Computer: India's fourth largest exporter, cut its 2009 recruitment plans from 15,000 to 10,000 and has suspended travel for all but the most critical needs.

Wipro: Fifty percent of this giant Indian technology outsourcer's customers are from the U.S. And many are postponing or downsizing contracts. Consequently, Wipro recently laid off 2.5% of its work force.

The Trends for Arranged Marriages
Are Extremely Telling ...

You may be surprised that most marriages in India are still arranged by parents. And parents of daughters are very interested in making sure their future son-in-laws have good jobs and can support their families.

So young men working in the technology sector have been among the most desirable marriage partners.

But that is drastically changing ...

Jagadeesh Angadi, a matchmaker in Bangalore, said, "'Because there are no job guarantees for IT people, for the last six months brides' families have not been accepting grooms from this background."'

What Does This Mean For Investors?

First of all, I'd steer very clear of Indian stocks for right now.

I love the Indian people and admire the heck out of their intelligence and work ethic. But the combination of their slowing economy and horribly deficient infrastructure — highways, power plants, airports, water plants, shipping ports — makes it very unlikely that the Indian economy will rebound right away.

Don't forget, however, that stock markets usually bottom 6-12 months before the underlying economies do. And the bottom of the bear market for Indian stocks may be closer than you think.

Second, make the most of market rallies to raise cash. Put that money into short-term Treasuries or Treasury-only money market funds.

After all, a bargain isn't a bargain unless you have money to take advantage of it. And when the time is right, you'll be able to buy India's best companies for dimes on the dollar.

Deutsche Bank starts layoffs in India

Even after receiving a fresh dose of capital for business expansion, Deutsche Bank India is learnt to have started laying off employees following the general industry trend. Though Deutsche Bank remains mum about job cuts, a senior official close to the development indicated the bank had asked several officials to quit as a cost-cutting measure.

When contacted, Deutsche Bank India spokesman told ET the bank would not wish to comment. An e-mail sent last Friday (December 5) to the official seeking details of the job cuts and the reasons behind it did not elicit a response.

However, a senior bank official said on the condition of anonymity the decision to lay off some of its employees was in order to “make minor adjustments in its human resources front”. Incidentally, there have been talks of Deutsche Bank laying off staff at its Singapore operations too.

The German bank also remained silent on its current employee strength. As on March 2008, it had 3,500 employees for its 11 offices here. The tally significantly rose from 2,250 a year ago and 678 in March 2006, according to Reserve Bank of India’s latest fact sheet on banks. A banking industry executive claimed the number was growing this financial year too despite this retrenchment. Overall, the group has over 6,000 employees in India.

What has surprised banking circles is the fact that Deutsche started laying off employees even as it infused Rs 325 crore of fresh capital into its India operations. A significant chunk of the money is expected to be used for its corporate banking expansion.

Himachal industries lay off workers following recession

The hilly state of Himachal could not escape the heat of the global financial meltdown.The industries in the state have started laying off the employees as a part of cost-cutting measures

The units located in Baddi-Barotiwala and Nalagarh area that account for more than 70 per cent of industries in Himachal are shedding their workforce to resort to cost cutting.

According to the Centre of Trade Union(CITU) leaders in Himachal, the impact of the economic slowdown has definitely affected industries in Himachal, where employers have started giving pink slips to the employees.

N T Ranaut, general secretary, CITU said units like auto ancillaries and other manufacturing units have laid off more than 500 employees in wake of the recession.

Recently, auto parts manufacturer Gabriel India Ltd (GIL), which opened its plant in Parwanoo few months back, has sought permission of the labour department to lay off 140-150 workers.

Similarly, Su Kam Power System, manufacturers of power inverters, had suspended production in Baddi last month, citing no demand. There were rumours that company had applied for closure of their units in Baddi, but the labour department in Himachal maintains that things have now been sorted out and there is no issue of the company closing its operations.

Another company Hunter Telecom India Pvt Ltd had closed down their operations in Baddi last month, thus laying off around 50 workers.

B R Verma, Himachal labour commissioner, said the state has somewhat managed to withstand the impact of the recession .He said that the department had received two proposal where companies have requested for permission to close down the units.

While Purewal industries have applied for closure of their unit, Gabriel India Ltd has sought permission for retrenchment.

Purewal industries have applied for closure of one unit at Jubbar, as the company is unable to meet the struggle posed by industries from China that has rendered their units uncompetitive. Around 491 employees are working in the unit.

Even as the state government has refused the company to close its unit at Jubbar, the company has moved the labour tribunal. Similarly, the order for Gabriel India Ltd permission is awaited.

No plans to cut jobs in India: Sony

Japanese electronics major Sony, which has announced a massive layoff of 16,000 employees across the world has said that it has no plans to cut jobs in India given the strong business growth in the country.
“The Tokyo-headquartered firm is reviewing its business in each country for the announced cost-cutting programme, but the Indian business is unlikely to see any job cuts given a ‘healthy business growth’,” Sony India Managing Director Masaru Tamagawa said in an email statement.
Tamagawa was responding to a query on whether India would be impacted from Sony’s planned cost-cutting measure to eliminate 8,000 full-time staff and another 8,000 temporary employees from its global workforce.
“Based on expectations of the future economic environment and the electronics business, Sony Corporation is enacting various measures, such as lowering fixed costs and reducing headcount at a macro level,” he said.
“Our Headquarters is now starting to review each country’s, business, and sales operation. However in India given our healthy business growth, we do not foresee any manpower reduction,” he added.
Yesterday, the Japanese firm announced the job cuts as part of a billion-dollar cost saving exercise in a bid to improve profitability and enhance operational efficiency in its electronics businesses.
Besides, under the corporate restructuring measures, Sony is planning to reduce investment in the electronics business by about 30% by fiscal 2010, compared to its mid-term plan.
The electronics giant also plans to reduce the total number of manufacturing sites by 10% from the current total of 57 by 31 March, 2010.

Yahoo to lay off 3% of India workforce

Global Internet major Yahoo is understood to have issued lay-off notices to three per cent of its India workforce due to the ongoing slowdown.

Sources close to the company said, "As part of Yahoo's strategy to perform competitively in the current economic downturn in India, less than 3 per cent of the total Indian workforce has been impacted and they were notified on Wednesday."

Yahoo has about 2,000-strong workforce in India and it is likely that a maximum of 40 people would be impacted by the decision, the sources said, and added that "a significant number of employees were affected due to poor performance and only a few of them due to the slowdown".

The Yahoo notification, according to sources, read: "Yahoo is grateful for the important contributions made by the employees affected by this reduction and that is why, consistent with our past practices, we are making every effort to support impacted employees with severance packages and outbound placement services."

Yahoo has a R&D centre in Bangalore where a large number of its India employees are located.

About 1,500 Yahoo employees -- about 10 per cent of its workforce  - are likely to be laid off globally, to enable the company survive the deteriorating financial turmoil.

Chief Executive of Yahoo! Jerry Yang had said in November that he would leave the company, after facing strong criticism for his leadership.

Hiring prospects lowest since 2005

Global slowdown has dampened hiring prospects of India Inc, causing its outlook to hit the lowest ebb, with only 19 per cent employers having positive recruitment plans in the next three months, according to global staffing services firm Manpower.

This is the weakest outlook observed in India since the survey began in Q3 2005. This outlook represents considerable decrease of 24 percentage points quarter-on-quarter and 27 percentage points year-on-year, the Manpower employment outlook survey for the first quarter of 2009 said.

With this drastic fall, India has lost its top position after two consecutive quarters. Employers in India now report the second strongest hiring intentions globally, next to Peru, which has reported a net employment outlook of 24 per cent.

"Though hiring intentions remain positive, Indian employers are reporting a much slower hiring pace as compared to the last quarter and year. Employers in all the seven industry sectors and four regions have reported considerable decline in anticipated hiring activity for the first quarter of the New Year," Manpower India Managing Director Naresh Malhan said.

Responding to a query as to when will there be a sign of recovery, Malhan said, "The amount of damage done to the world economy is still uncertain. It will be another 4-6 months, by the time we get to know when the recovery start will start. It will get worse before it gets better. Considering the present situation, it is unlikely to improve in the next few quarters."

India is getting into a doom loop, but the country can get out of it with sufficient support from the government as well as private firms, Malhan added.

It is not an outright blanket ban on hiring plans. There is just slowdown. Companies with robust plans are willing to go ahead, so opportunities are still there. At present, it is a question of re-prioritisation, he said.

"The times may seem challenging but the employment scenario in the country is not as gloomy as the rest of the world and according to the survey, India will be one of the most actively hiring nations for Q1 '09," Malhan added.

However, recruiting confidence among employers in India is the strongest of all the eight countries and territories surveyed across the Asia-Pacific region for Q1 2009.

Of the 3,557 employers surveyed, 22 per cent expect an increase in staffing levels in the first quarter of 2009, four per cent anticipate a decrease, and 63 per cent are expecting no change.

Sectoral analysis shows employers in the services sector as well as the mining and construction sector are expecting the most active hiring environment in the coming quarter with a net employment outlook of 23 per cent. While, wholesale and retail trade employers reported the least optimistic hiring intentions with a net employment outlook of 11 per cent.

A regional analysis shows that employers in all four regions in India anticipate positive hiring activity over the next three months though all indicate a sharp decline in hiring intentions compared with last quarter and year.

Hiring plans are strongest in East India, with a net employment outlook of 20 per cent. For South India it is 19 per cent. The weakest hiring intentions are reported by employers in West and North India, each reporting the net employment outlook of 18 per cent.

As per the global results, employers in 25 of 33 surveyed countries and territories still expect positive hiring activity in the coming quarter. However, those in 30 say they would slow the pace of hiring from three months ago.

Asia's biggest job cut, Sony to chop 8,000 jobs

Japan's Sony Corp said it will slash about 4 per cent of its workforce, scale back investments and pull out of businesses as it aims to cut $1.1 billion in costs out of its ailing electronics operations.

The 8,000 job cuts -- the biggest announced by an Asian firm so far in the financial crisis -- and other restructuring steps underscore challenges facing Sony, which has fallen well behind Apple Inc's iPod in portable music and is struggling to make money on flat panel TVs.

Analysts questioned if it would be enough for Sony, which employs about 186,000 people worldwide in businesses ranging from movie making to video games. ''The number sounds big, but this staff reduction won't be enough. Sony doesn't have any core businesses that generate stable profits,'' said Katsuhiko Mori, a fund manager at Daiwa SB Investments.

''After the workforce reduction, the next thing we want to see is what is going to be the business that will drive the company.'' Shares in Sony, which have fallen nearly 70 percent this year, closed up 3.9 percent at 1,896 yen ahead of the announcement.

The restructuring marks a major setback for Chief Executive Howard Stringer, who had seemed to have the electronics and entertainment conglomerate back on track after implementing a wide-ranging restructuring after taking the helm in 2005.

Like rivals Samsung, Panasonic and just about every other big consumer goods firm, Sony faces a bleak Christmas shopping season as the financial crisis grows into a broad recession that has already engulfed the United States, parts of Europe and its home market in Japan.

Sony, along with other Japanese manufacturers, has also been hit hard by a surging yen, with the currency's rise to 13 year highs this year cutting into the value of its earnings and making its products less competitive in overseas markets.

The maker of Bravia flat TVs and PlayStation 3 video game consoles, said in October when it more than halved its annual operating profit forecast that it would need to close some plants, reduce capital spending and lay off workers.

Hiroaki Osakabe, fund manager at Chibagin Asset Management, said the restructuring was unlikely to trigger a share rally. ''The scheme doesn't contain anything new, like a new earnings pillar or a growth strategy. It was something that people had expected, and I think the market had already discounted the announcement,'' he said.

Sony said it would delay plans to boost output for liquid crystal display TVs in Slovakia, outsource production of image sensor semiconductors, and reduce the number of manufacturing sites by about 10 percent from the current 57. It aims to cut investment in its electronics business by 30 percent in the next business year to March 2010 compared with a previous business plan.

Recession hits BPOs, sector seeks bailout package

The tremors of American recession will soon be felt in India. The $11 billion BPO sector - which gets most of its business from the United States - will bear the brunt. Industry is projecting a cut over 2.5 lakh jobs starting from the first half of 2009.

According to Nasscom, the BPO sector employs 7,00,000 people

President BPO Industry Association, Samir Chopra says, "'Severe job loss is expected because of recession. We are going to request for a fiscal package from the Government but if that doesn't happen, then there be huge amount of losses in terms of manpower. I think a quarter of a million jobs will go.''

The job cuts follow a decline in growth. IT major Infosys predicts a drop of 15 per cent in growth from 30 per cent last year.

Infosys CEO & MD, S Gopalakrishnan says, "'There is a slowdown, no question about it. I think you know what is happening around the world has had an impact."

Coupled with the slowdown, the devastating attack on Mumbai too has lead to fears that new investments might not come. The companies now want a fiscal package from the Government to tide over. Their top demand would be to extend tax relief to the industry for another 5-10 years.

US: 30,000 jobs gone in last week and still counting

News of the US officially slipping into recession seems to have spurred another round of massive retrenchment, as the first week of December alone saw a stunning 30,000 layoffs, with more than half happening in the world's largest economy.

The whopping numbers are just a continuation of a strained labor market as employers in America slashed 5,33,000 jobs in the month of November, the maximum downsizing in 34 years.

Right from telecom giant AT&T to battered banking major Credit Suisse to steel maker ArcelorMittal, the layoffs are spread across the sectors, amid the worst financial turmoil since the Great Depression of 1930s.

Moreover, since the start of recession in December last year, as concluded by the National Bureau of Economic Research, 1.9 million people lost their jobs and two-thirds of the losses happened in the last three months.

Leaving a gloomy November, this month's layoffs are led by AT&T which would slash 12,000 jobs or about four per cent of its total workforce.

The telecom entity cited economic pressures and a changing business mix, among the reasons for the latest move.

Further, Swiss banking giant Credit Suisse would be axing 5,300 jobs, accounting for 11 per cent of its global workforce, by the first half of the next year.

Battered by the financial turmoil, the company had incurred a whopping loss of about USD 2.5 billion by November-end in the fourth quarter. Credit Suisse already slashed 1,800 jobs this year.
In yet another job cutting act, software maker Adobe has announced it would cut 600 full-time positions worldwide.

In yet another job cutting act, software maker Adobe has announced it would cut 600 full-time positions worldwide.

Other major job cuts have been announced by ArcelorMittal (over 9,000 jobs), American car rental firm Avis Budget Group (2,200 jobs), Japanese financial services major Nomura (about 1,000 jobs), General Motors (2,000 jobs) and chemical company Dupont (2,500 jobs).

Moreover, JPMorgan is reportedly planning to reduce its workforce by 21 per cent. The move is expected to result in 4,000 employees being given the pink slip by January at Washington Mutual, the failed American entity which was snapped up by the former in September.

The unemployment rate jumped to a 15-year high of 6.7 per cent last month, reflecting the strained labour market which has seen massive layoffs by many corporate giants.

"Non-farm payroll employment fell sharply (-533,000) in November, and the unemployment rate rose from 6.5 to 6.7 per cent," the Bureau of Labor Statistics, which is a part of the US Labor Department, said on Friday.

The job losses, widespread across major sectors, are reportedly the worst since December 1974.

Further, the ADP National Employment Report showed that private American companies had cut 2,50,000 jobs last month.

In addition, US-based 3M Co would axe 1,800 jobs, media conglomerate Viacom would reduce workforce by 850 in number and banking firm Jefferies Group would cut over 250 people.

Reliance group, support firms ask 5,000 to resign

The global financial crisis has hit India's largest private sector conglomerate. The Reliance group and its associate companies have asked about 5,000 employees to resign, according to inside sources. A significant portion of the staff reduction has come from the retail operations.

Some of the companies involved in the exercise are Reliance Retail, Reliance Logistics, Reliance Info Systems and Reliance Corporate Park. The resignations, as against a straight lay-off, leave employees in a better position to find new jobs.

A Reliance Industries spokesman did not comment on a detailed questionnaire sent by Network18, asking for more time to respond.

The associate companies have been supporting Reliance Industries' core operations for several years. But now, divisions within these companies are being shut, sources from within the companies said. Most of the affected employees are permanent, middle-level managers.

Some employees said as many as 3,000 people in the retail business could be sent home, as the proposed expansion had been scaled back after an abrupt change in economic prospects in the last six months.

The group entered the retail business in 2006 with a planned investment of Rs. 25,000 crore.

It was a strategic move designed to take the group beyond its core commodity business and was supported by a slew of subsidiary and associate companies like Reliance Gems and Jewels, Reliance Supply chain, Reliance Dairy Production and Reliance Agri Products.

But soon protests by small retailers and then the economic slowdown hampered aggressive expansion plans. Now, employees in nearly all departments related to the retail business are being fired, said a former employee, who recently left.

In some states, the protests and slowdown have meant the company has decided not to open stores there. Real estate teams are down to one person in such places and other places. While electronics store chain `Reliance Digital’ was supposed to have 20- 25 stores in the first year but actually opened only 3- 4, the hypermarket format was supposed to open over a hundred stores but has opened only two.

In the footwear store chain and health and wellness store chain, Reliance had hired aggressively to keep up with the expansion, but plans didn't materialize.

Reliance Logistics, a Mumbai-based company managed by the RIL chairman’s cousin Niraj Ambani, is one such case. The privately held company that was started in 2001, employs about 2,600 people, of which about 1,000 have been asked to leave in the last two weeks.

Marketing, process quality and business planning departments in the company are being shut down. Employees were given oral orders to resign and have been given the option of staying home and collecting their salaries for the next three months, sources who did not want to be named said.

Since the beginning of the year, this company had been doing third-party work for other companies in the retail business like ITC and Hindustan Unilever. But this has dried up.

Sources in Reliance Retail Limited, a direct RIL subsidiary, said many employees in support functions including information technology have been put on notice. The retail rollout has slowed down considerably specially in Uttar Pradesh, Kerala and West Bengal.

Reliance East West Pipelines has completed construction of the pipeline that will transport gas from the east coast to markets in western India. In better times, RIL would have deployed the white collar workforce to other projects. This time around, 400 employees are anxious as no orders have been received.

US crisis continues, November leaves 5,33,000 jobless

The economy shed 5,33,000 jobs in November, according to a government report Friday — bringing the year's total job losses to 1.9 million.

November had the largest monthly job loss total since December 1974.

"No one expected such a drastic number," said Tig Gilliam, chief executive of placement agency Adecco. "This is a real wake-up number."

According to the Labour Department's monthly jobs report, the unemployment rate rose to 6.7% from 6.5% in October. Though lower than economists' forecast of 6.8%, it was the highest unemployment rate since October 1993.

Economists surveyed by Briefing.com had forecast a loss of 325,000 jobs in the month. November's monthly job loss total was greater than October's revised loss of 320,000. Payroll cuts in September were revised up to 403,000.

The revisions brought the 3-month job loss total to 1.3 million. That's equal to two-thirds of this year's total job losses and the third highest three-month job loss total since World War II.

November's report provided the first glimpse at how employers reacted after the peak of the credit crisis, reached in mid-October. With credit largely unavailable and expensive, consumers scaled back their spending, dragging down manufacturing and construction businesses.

Travel has also been trimmed, with would-be vacationers opting to stay close to home.

Accordingly, job losses were spread across a wide variety of industries. Manufacturing lost 85,000 jobs, the leisure and hospitality industries cut 76,000 jobs, and construction employment shrank further by 82,000 jobs.

In a bad sign for the ongoing holiday shopping season, retailers slashed payrolls by 91,300 workers last month.

Professional and business services, a category seen by some economists as a proxy for overall economic activity, had a 136,000-job drop in employment. And financial services jobs fell by 32,000.

The just-under 1.9 million jobs lost in the current recession, which began in December 2007, surpasses the 1.6 million jobs lost in the 2001 recession. That's noteworthy, because jobs were cut in droves in 2001 during the dot.com bust, which followed a white-hot employment market during the tech boom of the late 1990s. The job market expansion leading out of the previous recession was much more drawn-out and tepid.

With the economy in a recession and most economic indicators signaling even more difficult times ahead, economists say job losses will likely deepen and continue through at least the first half of 2009.

Citing weak economic conditions, a slew of large-scale job-cut announcements came this week. On Thursday alone, AT&T (T, Fortune 500), DuPont (DD, Fortune 500), Viacom (VIA), Credit Suisse (CS) and Avis (CAR, Fortune 500) issued statements that totaled nearly 23,000 jobs lost, most of which will take place over the next several months.

According to a report by outsourcing agency Challenger, Gray & Christmas, planned job cut announcements by US employers soared to 181,671 last month, the second-highest total on record.

Temporary employment, including workers employed by temp agencies, fell by 100,700 jobs last month, the highest on records that go back to 1985. That could mean even more full-time payroll reductions to come, as employers often cut temporary workers before they begin cutting permanent staff.

Adecco's Gilliam said employers are trying to position their companies to weather the ever-intensifying economic storm.

"CEOs are trying to get their businesses better positioned for the start of the year so they're not constantly chasing the slowdown" he said. "December will be another very tough month."

In another sign of weakness, a growing number of workers were unable to find jobs with the amount of hours they want to work. Those working part-time jobs - because they couldn't find full-time work, or their hours had been cut back due to slack conditions - jumped by 621,000 people to 7.3 million, the highest ever on records that date back to 1955.

The so-called under-employment rate, which counts those part-time workers, as well as those without jobs who have become discouraged and stopped looking for work, soared to 12.5% from from 11.8%, setting the all-time high for that measure since calculations for it began in January 1994.

But some industries were hiring last month. Government hiring has stayed strong throughout the downturn, adding another 7,000 jobs in November. Education and health services also grew payrolls, which grew by 52,000 employees.

The average hourly work week fell to 33.5 hours last month. Economists expected the workweek to hold at October's level of 33.6 hours. But with a modest 7-cent gain in the average hourly salary, the average weekly paycheck rose by 52 cents to $613.05.

With 2008 already the worst year for jobs since 1982 and on pace to become the worst since 1945 - and second worst on record - support for a second stimulus package to boost the job market has grown among economists and lawmakers.

The prior stimulus package in the spring sent tax rebate checks to millions of tax filers. It helped the economy grow in the second quarter, but it did little to stem the tide of job loss in the country.

But the proposed stimulus package, supported by President-elect Barack Obama, would focus on aid states and municipalities as well as consumers, adding millions of infrastructure jobs for Americans.

"Our economy has already lost nearly 2 million jobs during this recession, which is why we need an Economic Recovery Plan that will save or create at least 2.5 million more jobs over two years," said Obama in a statement. "There are no quick or easy fixes to this crisis, which has been many years in the making, and it's likely to get worse before it gets better."

Experts say a two-part stimulus package is the right way to stem the tide of mounting job losses.

"First, you have to get consumers to spend, since 70% of the GDP is tied to consumer spending, and then you need job stimulus like highway projects to maintain economic job growth," said Gilliam. "This number is so bad that Obama will have to do something drastic soon."

Wipro puts 9,800 freshers on hold

Reeling under the impact of global meltdown, Wipro Technologies Ltd has kept about 9,800 graduate engineers, hired from campuses last year, waiting to join the IT bellwether, a company official said.

"Of the total 13,500 campus offerings made across the country last year, we have taken 3,700 of them so far, while the remaining (9,800) have been told to wait for their turn to join," Wipro vice-president for talent acquisition Pradeep Bahirwani told reporters at a hurriedly called press conference.

Due to slowdown in the IT industry and tough business environment, Bahirwani said, the company had discontinued campus offerings this fiscal for the time being.

"We have made 8,000 campus offers across the country in about 200 engineering colleges, including IITs and NITs (National Institutes of Technologies) this year as against 13,500 last year," Bahirwani said.

To make better use of the engineering freshers hired but not absorbed, the company has began to offer them the option of joining its BPO (business processes outsourcing) division at its software development centres in Kolkata, Bhubaneswar and Hyderabad for the same compensation fixed for IT services.

"To meet our BPO division's requirements in technical support, we have offered them the choice of coming onboard or wait as long for the joining date at the salary stack made in the offer letter. We hope to see a turn-around in business after 12-18 months to move them to IT services," Bahirwani said.

The company's novel initiative to ask freshers hired for IT services to join BPO division by paying upfront Rs 75,000 for bond backfired in Kolkata, with the hired engineers protesting against such the move and taking up the matter with West Bengal IT Minister Debash Das on Monday.

"The option has been given in commensurate with our current requirements, which are

more in BPO than in IT services, as technical support
role requires engineering grads
and not those from science or general stream. There is no compulsion or change in compensation," Bahirwani clarified.

Defending the offer to join the BPO division, the HR official said the decision was taken to give an opportunity to engineering graduates to get on work without further delay.

Wipro's global IT services business had 97,552 employees, including 16,500 in the BPO division till the second quarter (July-September) of this fiscal.