Saturday, July 25, 2009

Bangalore's IT tribe fights to stay on the job

Till a few months ago, IT professional T V George was earning Rs 70,000 per month, plus perks. But after losing his high-paying job, and being unemployed for three months, George, 31, has started giving tuitions in mathematics and physics to aspiring engineering students.

"Now, I am earning Rs 15,000 per month. It's been hard. I got married only a few months before losing my job. So, when I lost my job, I was in a difficult position. Thankfully, I had some savings. With the savings, I am paying my rent and for a few other necessities," says George, who was employed with a top US IT company.

"After losing my job, I tried my best to get a new job. But I remained unlucky. So to help run my home, I decided to give coaching classes to aspiring engineering students."

George is not alone. Recession has hit the IT sector in Bangalore, with scores of technology professionals losing their jobs. Some have been forced to take up low-paying jobs as they wait to bounce back when the recession ends.

Dipankar Dutta, 27, working with an Indian IT company as software engineer, lost his job almost eight months ago.

Today he has a job, but as a content writer in a tech firm.

"Thankfully, writing has been my forte. So, I landed this job of a content writer. Otherwise I would have been in a soup. Since I cannot afford to stay in Bangalore without a job, I compromised and settled for the new job with a much lower pay package," said Dutta.

Scores of IT and ITES professionals in Bangalore have lost their jobs in recent times, an effect of the global economic meltdown. But there is no precise count of the numbers.

According to the latest employment and business outlook report by Bangalore-based staffing firm Teamlease, at 23 percent the attrition rate in this city is higher than in any other in India.

The report was based on interviews with HR heads, CEOs and senior executives of 495 companies in Bangalore, Chennai, Hyderabad, Kolkata and Pune.

"The city accounted for the highest attrition rate. IT accounts for over 80 percent of the city's total labour pool. The attrition rate was 23 percent in the last quarter, against the previous quarter's 16 percent. Much of the attrition could be involuntary attrition (or layoffs)," Teamlease general manager Surabhi Mathur-Gandhi said.

India's Silicon Valley has seen thousands of people getting pink slips in recent months. And many more are under the threat of losing their jobs.

"It's painful to lose your job, in today's expensive world. Those who have lost their jobs are desperate now, thus they are settling for low paying jobs," Karthik Shekhar, general secretary of UNITES-Professionals, an unrecognised union of IT/Call Centre/BPO employees, told IANS.

"Every day we meet young men and women who have lost their IT jobs recently. All they want is a job. But getting a job in the IT sector is very difficult. So, they have no option but to settle for jobs outside their fields and that too with low paying packages," Shekhar added.

"It's encouraging that today's youths are ready to move ahead in their lives. Instead of waiting for the economy to revive, IT professionals have started exploring other fields and this is a positive sign," said B.N. Gangadhar, professor of psychiatry at the National Institute of Mental Health and Neuro Sciences (Nimhans), Bangalore.

"Initially it was difficult, but I am happy with my choice. After losing my job with an IT firm, now I am working as a sales executive. I am hoping the economy will recover soon and all the professionals who have lost their jobs will get new jobs in their field," says Mohammed Khan, a software engineer.

Thursday, July 23, 2009

New jobless claims rise to 554K, total rolls fall

The number of newly laid-off workers seeking jobless benefits rose last week, though the government said its report again was distorted by the timing of auto plant shutdowns.

Unemployment insurance claims have declined steadily since the spring, but most private economists and the Federal Reserve expect jobs to remain scarce and the unemployment rate to top 10 percent by year-end.

Elsewhere, the housing market showed more signs of life as sales of previously occupied homes rose for the third straight month in June, according to the National Association of Realtors. That helped push the Dow Jones industrials above 9,000 for the first time since early January.

The Labor Department said Thursday that its tally of initial claims for unemployment insurance rose by 30,000 to a seasonally adjusted 554,000. That was above analysts' estimates of 550,000.

The increase follows two straight weeks of sharp drops largely because automakers didn't lay off as many workers as expected in early July. General Motors and Chrysler temporarily shut down many of their plants earlier than usual this year, in May and June, after filing for bankruptcy protection and restructuring their companies.

A department analyst said the government's seasonal adjustment process expected claims to drop sharply last week, after the normal pattern of auto layoffs was complete. But that didn't happen, causing seasonally-adjusted claims to rise.

Still, some economists saw positive signs in the report. The four-week average of claims, which smooths out fluctuations, dropped to 566,000, its lowest level since January.

"The trend in jobless claims is still downward," Joseph Lavornga, chief U.S. economist at Deutsche Bank, wrote in a note to clients.

But Lavornga also said the unemployment rate likely will keep rising as long as initial claims remain above 400,000. He expects the jobless rate to increase to 9.6 percent this month, from a 26-year high of 9.5 percent in June.

The financial markets shrugged off the news. The Dow Jones industrial average added about 170 points in midday trading to 9,055. Broader indices also rose.

Still, weekly claims remain far above the 300,000 to 350,000 that analysts say is consistent with a healthy economy. New claims last fell below 300,000 in early 2007. The lowest level this year was 488,000 for the week ended Jan. 3.

The total jobless benefit rolls, meanwhile, fell by a more-than-expected 88,000 to 6.2 million, the lowest level since mid-April. And the four-week moving average of claims, which normally smooths out some volatility, fell by 19,000 to 566,000.

But the number of people on emergency extended state and federal programs continued to rise. Unemployment insurance recipients can receive up to 53 weeks of additional benefits from the emergency programs, on top of the 26 weeks typically provided by the states.

When the extended benefit rolls are included, more than 9.1 million people received jobless benefits for the week of July 4, the latest data available.

On the housing front, home sales rose more than expected to a seasonally adjusted annual rate of 4.89 million last month, from a downwardly revised pace of 4.72 million in May. Home sales last rose for three straight months in early 2004, during the housing boom.

But prices are expected to keep falling well into next year because of a backlog of foreclosures that have yet to come on to the market. The median sales price was $181,800 last month, down 15 percent from last year but up from $174,700 in May.

The recession, which started in December 2007 and is the longest since World War II, has eliminated a net total of 6.5 million jobs. The unemployment rate in June rose to 9.5 percent, a 26-year high.

More job cuts were announced this week, many by major airlines.

Houston-based Continental Airlines Inc. reported a quarterly loss of $213 million and said it would slash 1,700 more jobs on top of 1,200 already announced. Southwest Airlines Co., which has never laid off workers, announced that 1,400 employees - about 4 percent of its work force - took offers of cash and travel benefits to leave the Dallas-based company.

Among the states, New York reported the largest increase in initial claims, with 12,504, which it attributed to higher layoffs in the construction and transportation industries. The next largest increases were reported by North Carolina, Florida, Missouri and Tennessee. The state data lags initial claims by one week.

Michigan reported the largest decrease, with 6,648, which it attributed to fewer layoffs in most industries. Massachusetts, New Jersey, Indiana and California reported the next largest drops.

Thursday, June 4, 2009

Microsoft Plans To Lay Off 1% Of Indian Workforce

Software giant Microsoft announced its plans to cut 1% of its Indian staff as its net income declined 11% during the December quarter because of worldwide economic slowdown.

The declaration on this is part of the Redmond-based company's decision taken during January 2009 to slash around 5,000 jobs worldwide by June 2010 in order to save up to $700 million (Rs 3,500 crore).

The job cuts in India are part of the second round.

In India, the company's decision will impact around 55 people across Microsoft's six-business divisions spread across Bangalore, Delhi and Hyderabad.

In a major declaration, the company said, "Due to a global realignment of our business priorities, about one percent of the net rolls across India are likely to be impacted. These adjustments reflect the necessary changes to ensure that the right resources are focused on the right priorities."

When asked to give detailed information, the company's spokesperson declined to comment saying "We are currently working with the concerned employees to evaluate alternative positions internally and where applicable look at mutually favourable disengagement terms."

In a 10-Q filing to the Securities Exchange Commission on April 23, Microsoft said that it had reserved around Rs 1,200 crore for severance for 3,400 laid-off employees, "all of whom are expected to leave the company by June 30, 2010".

Satyam to cut cost, may lay-off 5,000 employees

Satyam is bulging with at least 10,000 employees who are not needed and half of them could lose their jobs.

With Tech Mahindra as the new owner, it's wait and watch for Satyam employees as plans to rationalise cost is chalked out.

"It is more than 10,000 people. Some form of less painful way of reduction of staff is an option which will have to be looked at," said Tech Mahindra CEO Vineet Nayyar.

CNBC-TV18 learns Tech Mahindra may be forced to let go of 5,000 employees. Sources say that out of 12,000 employees on the bench 7,000 employees are currently in-between projects, 500 are on unpaid leave and sabbaticals, and the remaining 4500 are under training.

"Satyam has the largest number of manpower. Compared to the billing, it has the largest number of manpower than any other IT company. So some amount of rationalisation is unfortunately absolutely necessary to make the company viable again," said Satyam board member Deepak Parekh.

When contacted, Satyam said, "There is no official number that has been stated at this point and the information is speculative."

Industry experts say that the lay offs are likely to start from Hyderabad, which has the largest number of employees.

The number may go higher than 5,000 as well but Tech Mahindra is taking efforts to work out ways to reduce the number of lay-offs and use other methods like sabbaticals and increasing virtual bench.

Meanwhile, the new Corporate Affairs Minister Salman Khurshid in an exclusive interview with Network18 spoke about the need to phase-out the government nominees from Satyam board.

The Minister is also unhappy about the proposed lay-off in Satyam.

"It is very easy to be on an extreme and say we won’t let you lay-off people. And it is very easy to say in an extreme tone that you can lay off if you like we have nothing to do with it. The government has to take a middle path to say, please lay off keeping in mind that this is a sensitive human issue. The government can’t, however, also say that it doesn’t matter if the company collapses, you don’t lay off anybody. The objective is survival of the company. They are hard decisions that are being taken and have to be taken," said Khurshid.

Saturday, March 28, 2009

IBM To Axe 5000 Employees In US

International Business Machines (IBM) plans to lay off about 5,000 US employees, with many of the jobs being transferred to India, a media report said today. The technology giant has been steadily building its work force in India and other locations, while reducing the number of employees based in the US. Foreign workers accounted for 71 per cent of Big Blue’s nearly 4.00,000 employees at the start of the year, up from about 65 per cent in 2006, the Wall Street Journal said.

The latest round of cuts target the company’s global business-services unit, which does everything from running corporate data centers to managing HR for clients. Some jobs are being eliminated as customers have ended contracts or the company has automated tasks. But employees were quoted as saying that they have been training IBM workers from India to do work that will now be moved overseas.

Friday, March 27, 2009

Google pays for 'over-investments', to cut 200 jobs

Google Inc is cutting its sales and marketing team by roughly 200 employees, saying it had over-invested in certain parts of the company.

The move is the Web search leader's latest effort to cut costs in a tough economy and a broad slowdown in advertising spending. In January, Google laid off about 100 recruiters and it said up to 40 people would be laid off in February, when Google pulled the plug on its radio advertising effort.

"When companies grow that quickly it's almost impossible to get everything right and we certainly didn't," said Omid Kordestani, Google’s Senior Vice President of Global Sales and Business Development in an announcement posted on Google's blog on Thursday.

"In addition, we over-invested in some areas in preparation for the growth trends we were experiencing at the time," he added. Google has nearly 21,000 employees. The Mountain View, California-based company does not disclose how many staff work in sales and marketing.

Sameet Sinha, an analyst with JMP Securities, said the cuts were in keeping with the agenda of Chief Financial Officer Patrick Pichette, who took the job last year and has made cost-cutting a priority. "His first line of attack was going after non-core expenses. Now he's looking at some of the major organizations there where you can cut costs," said Sinha, who rate Google's stock "market outperform."

His company makes a market in the stock. In the wake of U.S. sales head Tim Armstrong's recent departure from Google to take the top job at Time Warner Inc's AOL, Sinha said the sales team was more vulnerable to cuts.

Google is the No. 1 search engine in the United States, with a roughly 63 percent market share, according to comScore. In 2008, 97 percent of Google's $21.8 billion in revenue came from advertising.

Google's strength in text-based search advertising has shielded it from the difficult conditions plaguing the online display ads that companies like Yahoo Inc and AOL depend on. Even so, Google's business has not been completely immune.

Total sales grew 18 percent in the fourth quarter of 2008 versus 51 percent in the fourth quarter of 2007. A Google spokesperson said the company will seek new positions for affected employees, but it will not be able to place all of them.

It did not disclose the number of open positions it has. Google shares finished regular trade up 2.68 percent, or $9.22, at $353.29 on Nasdaq on Thursday.

Tuesday, March 10, 2009

United Technologies to fire 11,600 employees news

United Technologies Corp., which owns Pratt & Whitney jet engines and Sikorsky Aircraft, expects to cut 11,600 jobs and is lowering its 2009 forecast because of a deteriorating commercial aerospace market.

As of December 2008, it employed about 220,000 people. Additional hourly work force adjustments may occur during 2009 based on market driven production volume changes, the company said in a statement.

The world's largest maker of elevators and air conditioners said on Tuesday it expects to earn $4 to $4.50 per share in 2009, lower than the $4.65 to $5.15 per share it previously forecast. The new forecast includes 30 cents to 40 cents per share of restructuring charges, as well as some expected one-time gains.

CEO Louis Chenevert had said in December that strong backlogs would temper the effects of a rising dollar and deteriorating economic conditions in the second half of 2008. ''The outlook for commercial aerospace and global construction markets has continued to deteriorate since UTC's December investor meeting and the economic recovery previously anticipated in the second half of 2009 now appears unlikely,'' he said in today's statement.

The moves, part of an expanded $750 million restructuring program, are being driven by a decline in anticipated revenue, which is now expected to total $55 billion this year, down $2.7 billion from a December estimate. Analysts had expected $55.2 billion. The job cuts make up some of the more than $1 billion in cost savings generated this year.

United Technologies' extensive portfolio includes Carrier air conditioners, Otis elevators, Pratt & Whitney and Rocketdyne aircraft systems, helicopter-maker Sikorsky and safety-equipment manufacturer UTC Fire & Security.

Thursday, March 5, 2009

IIM-A average salaries down 25%, but finance sector hires most students

Global slowdown has taken its toll on the country''s top B-School the Indian Institute of Management-Ahmedabad (IIM-A) with average salaries coming down by 25%.

However, despite the Wall Street collapse leading to a financial meltdown, the finance sector recruited the highest number of students (39%) followed by consulting 24% and marketing 13% from the 265-strong batch.

A press conference is being addressed by IIm-A director Dr Samir Barua in Ahmedabad.

The placement week that had to be extended by 2-3 days because of the slowdown saw 109 companies coming in for placements with 95 of them picking up the country’s best management talent.

Though the institute missed Lehman Brothers and other top i-banks, finance sector did not disappoint, with first time recruiter Union Bank of India recruiting 18 students, the highest number recruited by any company, followed by Jaypee Capital, again a first time recruiter, which hired 12 students.

While Bain & Co hired 8 grads, McKinsey recruited 8 and Boston Consultants hired 7 students from the institute. Frost & Sullivan, again a first-timer recruited as many as 5 students.

Although the highest offer is not known yet, the Slot Zero, the placement slot reserved for elite recruiters, hired as many as 34% of the 2007-09 batch. It is learnt that many students received crore-plus salaries in this slot.

Last year, a record high salary of Rs 1.44 crore was offered to an IIM-A grad. The average salaries last year, were in the range of Rs 16-18 lakh.

This year the domestic offers are in the range of Rs 12-17 lakh while average international offers stood at $83,000 (excluding bonus).

Fullerton India lays off 3,000 employees

Temasek-backed NBFC Fullerton India has given pink slips to 3,000 employees, which is around 20% of its workforce in India. The Mumbai-based credit company is also learnt to have shut down 50 branches across the country owing to the liquidity crunch.

A company spokesman said, "This is a consolidation exercise, under which branches have been merged and under-performers have been asked to leave."

Another company official said those people laid-off were probationers and in the first year of their jobs. "Most of these employees were given six to nine months to develop their skills and were also provided with adequate training. Those who could not come up the learning curve have been asked to leave".

A wholly-owned subsidiary of investment major Temasek Holdings, Fullerton specialises in lending to the mass market which consists of small & micro entrepreneurs, small shops and trading establishments, self employed segment (annual turnover of Rs 2.5 lakh to Rs 1.5 crore) and the lower level of salaried individuals (annual salary of Rs 36000 to Rs 3 lakh).
The credit company had 800 branches across the country and employed around 14,000 people. Singapore-based Temasek Holdings has invested $ 300 million in Fullerton India in the last couple of years, the last infusion was made in October last year.

Fullerton India has disbursed close to Rs 5,000 crore since it started operations in 2006 and has an asset book of Rs. 2,500 crore at present. While 70% of its lending portfolio constitutes loans to the self-employed segment, the remainder consists of loans to salaried individuals and two-wheeler loans. Most of these loans are unsecured. The company has an exclusive tie-up with Hero Honda and Honda Motorcycles for two-wheeler financing.

NBFC’s such as CitiFinancial and GE Money have also scaled down operations significantly in the past six months. While CitiFinancial has brought down its branch network from 450 branches to 170 branches, GE Money has reduced its network from 180 branches to less than 80 branches.

Fullerton Holdings is also planning the launch of its subsidiary Fullerton Securities, which will provide retail broking and wealth management services to clients in the mass affluent segment. The team is spearheaded by Rajiv Kakar, formerly head of Citibank’s consumer banking business in Turkey, Middle East and Africa and thereafter member of the board of Visa International for Central Europe, Middle East and Africa and Pallav Sinha, formerly Head of Wealth Management at Standard Chartered Bank, India.

Malaysia to lay off 15,000 foreign employees every month

In a bid to protect domestic workers from retrenchment following global financial crisis, Malaysian government has planned to recruit 15,000 locals every month by replacing foreigners, including Indian, working in various sectors in the country.

The government has said that it is to identify a few sectors where its citizens could work replacing foreigners.

The Human Resources Ministry is looking at turning over to locals 15,000 jobs a month currently held by foreign workers, local media said here today.

At least 15 sectors could be identified, one of them being service industry, Star paper said.

Malaysia relies on the services of foreign professionals for its constructions industry, plantations, restaurants, security and housekeeping. Most of them are sourced from India, Indonesia, Bangladesh, Nepal and Pakistan.

The ministry would identify jobs suitable for locals to take over from foreign workers, Human Resources Minister S Subramaniam said.

"The aim is to ensure that priority for these jobs is given to locals who have been retrenched," Subramaniam said, adding that both employers and employees must have a change of mindset.

Hexaware cuts benched staff's pay

Mid-sized IT firm Hexaware Technologies on Wednesday said it has cut the salaries of about 350 employees, who are currently on the bench, as part of its cost control measures. The reduction in salary would entail a cut of up to 50% from the basic pay.

In addition, employees above a certain designation will take salary cuts ranging from 2-10%, said the IT firm in a statement.

The company also plans to give the 350 employees ‘time-off’ to improve their skills and get re-trained, which are in demand. It will also organise re-skilling and training opportunities for these employees and continue to give them provident fund and gratuity benefits, as well hospitalisation insurance and life cover, added the statement.

“The employees will continue to be on the pay rolls of Hexaware, while the organisation will continue to identify opportunities for them and identification of projects, absorb them into the mainstream,” said the company.

Hexaware is the second IT company to effect what is now being termed as a ‘virtual bench’ concept. Before this, another mid-size IT firm Mastek had put employees, who were not billable, on reduced salaries equivalent to their severance pay for one year.

Apart from introducing a virtual bench, Hexaware will also reduce salaries for all the staff, barring those with less than three years of offshore experience. As a result, salaries of about 40% of employees will be unaffected, according to the company.

Monday, March 2, 2009

HSBC to slash 6,100 jobs in US

Europe's largest bank HSBC will be cutting as many as 6,100 jobs in America, as the entity has decided to close down majority of its business network for consumer finance segment.

The job losses come as the bank would cease to write new consumer finance business through the HFC and Beneficial brands in the US.
Household Bank is a trading name of HFC Bank Ltd, which is a member of the HSBC Group.
"... We will close the majority of the HFC and Beneficial-branded US branch network, regrettably with the loss of 6,100 jobs. This will result in a restructuring charge of $265 million in the first half of 2009," HSBC today said in a statement while announcing its annual results.
The firm has reported a pre-tax profit of 9.3 billion dollars for the full year 2008, a decline of 62 per cent as compared to the year-ago period.
HSBC attributed the decision not to write new consumer business, to lack of home equity, the deteriorating outlook for house price appreciation and very limited refinancing opportunities available to this customer segment in the near term.
"... We will cease to write new consumer finance business through the HFC and Beneficial brands in the US, and will concentrate on running-off the outstanding real estate secured and unsecured portfolio of $62 billion," it added.
HSBC noted that the restructuring charge of $265 million would include closure costs and non-cash charges, and annualised cost savings of about $700 million.
"With downside risks for unemployment and residential real estate in the US, we expect credit provisioning to remain elevated and operating losses to continue in 2009 and 2010," the statement said.
For North America, the company reported a loss of $15.5 billion including the goodwill impairment charge of $10.6 billion in Personal Financial Services

Layoffs possible, says TCS

As part of cost cutting-measures to tackle the global economic downturn, IT major TCS today said job-cuts are possible if the situation worsens, but said there are no immediate plans for lay-offs.

The company has, however, ruled out salary hikes next year and frozen “lateral intake” besides increasing weekly working hours for employees.

TCS managing director S Ramadorai said “there would be no hike in salaries in the forthcoming year” and added that “job cuts are possible if the situation worsens”. He added that the company is reviewing variable pay components of the staff salaries. The variable pay component of TCS employees differs between 22 per cent and 35 per cent of his/her gross salary, depending on an employee’s rank, he said.

Variable pay represents 8 per cent of the total revenue of TCS, whose headcount is 1.4 lakh. “We have around 1,40,000 on our payroll. On an average, 20-35 per cent of an employee’s gross yearly salary is the variable pay component,” said Global Human Resources vice president Ajayendra Mukherjee.

Wednesday, February 25, 2009

No jobs left

THE Indian financial sector, a relatively new industry when it took off post-economic reforms, generated a substantial amount of wealth and employment within a short span of time. Layoff was unheard of in the industry. But in the past six months, the word became the most dreaded one. With international financial services companies either collapsing or facing massive losses in the United States and the United Kingdom, Indian companies are beginning to feel the heat. The first area that is being “corrected” in order to streamline their operations is human resource.

In Mumbai, India’s financial capital, the mood is sombre. Nobody is taking anything for granted.

“When businesses begin losing money or services become redundant and you need to cut costs, the first target is employment,” said Miten Mehta of Bellwether Capital, a private broking and investment firm. “Of course, it is unfortunate and there could be other methods of cutting costs but with salaries at such staggering levels, by right-sizing, as it is now called, you get an immediate relief on costs.”

Several private firms, including Indian companies Frontline spoke to, are of the opinion that layoffs are inevitable given the global crisis, but they are unwilling to divulge numbers or percentages of staff they could lay off.

Among the figures that are in the public domain, banking juggernaut Citibank has laid off 37 top-level executives in India. It plans to axe 50,000 jobs worldwide, including 1,000 in this country. A leading investment bank in India, DSP Merrill Lynch, has let go of 40 executives from its private banking division, causing much angst in the financial community. Financial services major Barclays plans to layoff 2,100 people in investment banking and money management across the world. It has a presence in India. So the axe may fall here too.

The only comment Citibank offered when contacted was that the attrition level was “natural”, and was in accordance with its annual average. With regard to hiring, it admitted that recruitment was not at the levels it was in the past three years.

“The next 18 months look bleak. We are seeing just the beginning, and there is more pain to come. With several businesses in the financial services sector struggling to stay afloat, there is a freeze on hiring and hundreds of jobs are becoming redundant,” said a spokesperson for an international investment bank. “For us, the worst part is letting go of ‘performers’. Initially it was laying off those who were in any case on the brink because of non-performance or were at lower levels. Now, with businesses such as investment banking not doing well, we have had to reduce the head count and terminate the employment of some very good people from the middle to senior levels,” she said.

According to an investment banker with a small Indian firm, investment banking, which includes areas such as mergers and acquisitions and raising capital, is down by almost 50 per cent. This is across the spectrum – from large-scale international companies to boutique firms. Private equity is another section that is struggling. There are few IPOs (initial public offering), and private placement of shares has dropped dramatically from 2007.

Furthermore, new companies are not entering the market and so there are few job opportunities. In fact, the global finance leader Goldman Sachs was to bring its asset management division to India in 2008. It spiked the plan. A banker who was offered the job of heading this division said he had declined the opportunity as his company had made him a better offer. “It’s a twist of fate because no one declines Goldman. Yet I did, and now at least I still have my job.”

According to a recent study by the Associated Chambers of Commerce and Industry of India, employment generation in the top six sectors, which include finance, fell from 35 per cent in the first quarter to 15.8 per cent in the second and 10.8 per cent in the third. In the financial sector, the share of job creation dropped from 7 per cent in the first quarter to 2 per cent in the third quarter. A headhunter who does placements in high corporate positions said his business had virtually come to a standstill. “There are very few openings and too many people are vying for these jobs. We got used to high pays and good jobs from the late 1990s. So it is difficult to face this discouraging situation.”

But finance is cyclical, and this industry is known to have bounced back, says Mita Khanna, a director in a placement firm. A positive outcome will be that pay scales would become more rational. Besides, this is not the only sector in the industry to be suffering. Everyone is going through a rough time. Miten Mehta says India is primarily hit because of the problems of Wall Street. For instance, Lehman Brothers filed for bankruptcy and was subsequently bought by Barclays in the U.S. and Nomura in Asia. There will be job losses when acquisitions take place. Bank of America bought Merrill Lynch and caused a shake-up, he says. The effect will trickle into India.

Moreover, India’s exposure to money from overseas was huge. It is largely owing to this that the financial sector saw such a spectacular boom. The Indian stock market became heavily dependent on international money.

Explaining the crisis, Manish Sharma, an independent investment banker, says the Indian financial sector has witnessed many storms since liberalisation. It saw the Harshad Mehta and Ketan Parekh stock market scams and escaped almost unscathed from the Asian financial crisis in the late 1990s. “We averted the currency crisis, which afflicted several of the Asian tigers [Thailand, South Korea and Indonesia] primarily through our step-by-step approach and because we had not [and still have not] removed all controls on our currency policy.”

KAMAL NARANG
AT BARCLAYS' 24X7 branch in New Delhi.

However, the current crisis is different and we cannot escape its impact. India is more dependent on the global economy now than ever before. Although our banks had a very small exposure to sub-prime loans, we have been affected by the sub-prime crisis. Global liquidity dried up and Western markets started shrinking. This resulted in much lower capital flows to India, which in turn have knocked off more than 50 percentage points of the stock market index in less than a year, he says.

Indian companies suffered a double whammy with the shrinking of export markets and access to capital. “The well-being of the financial services sector is directly linked to the stock markets and the health of domestic businesses. With both in some trouble, the short-term outlook for the sector is not very promising,” said Sharma.
Nowhere to go

Preeti Singh (name changed), a corporate lawyer with a financial firm, lost her job recently as the company was downsizing. Earning close to Rs.30 lakh annually, she suddenly found herself straddled with monthly financial commitments but no assurance of an income to pay them. Preeti Singh cannot talk to the media as she has “gag orders”.

She came from New York with her husband in early 2008 after they were both offered lucrative positions in corporate houses in Mumbai. The downturn in the U.S. had not yet escalated, and when it did, she was glad to have made the decision to come to India. The couple rented a flat in one of Mumbai’s most expensive areas and led a typical young professional corporate existence. Membership in clubs, holidays abroad and two cars. With her job gone and the market so gloomy, she has currently no idea when or where she is going to get work. Even her investments, which could be a fall-back option for a few months, are not doing well since the stock market is so low. Preeti Singh’s case is typical of the many that have been laid off. A postgraduate with a background of good education, she is a hapless victim of circumstances.

“There is a lot of talent like hers out there but no one is willing to take them,” said Sharma.

Obama to stop outsourcing, India Inc worried

President Barack Obama's latest stand on outsourcing is worrying India- with the US already in recession and the President's announcements against outsourcing, the US is in protectionist mode.

“We will restore a sense of fairness and balance to our tax codes by finally ending the tax rates for corporation that ships our jobs overseas,” says President United States, Barrack Obama.

A strong warning by President Obama that will discourage US companies from outsourcing jobs to cheaper countries like India. In his first Congressional address, President Obama says it's time for America to lead again.

“We don’t accept that future where the jobs and industry of tomorrow take root beyond our borders and I know you don’t even, its time for America to lead again,” adds Barack Obama.

The President's constant anti-outsourcing tirade is a worrisome for India Inc. The industry's worries are understandable especially since India gets more than 60 per cent, or $64 bn, outsourcing work from the US.

This is not the first protectionist move the US has made since Obama took charge. Recently, it introduced an H-1B hiring ban for companies receiving bailout money.

The ban is likely to hit India's techies hard. Of the 65,000 H1-B Visas issued annually by the US government, 21,667 are to Indian techies.

For the Indian IT Industry, already hit by the recession, President Barack Obama's stand on outsourcing could not have come at a worst time.

Sunday, February 22, 2009

HP announces company-wide pay cuts to avoid layoffs

HP has followed up its lackluster Q1 financial disclosure with an internal memo announcing pay cuts for all employees, according to WebGuild. CEO Mark Hurd authored the memo, explaining that the company had to compensate for poor performance in several areas due to the ongoing economic recession. HP's desktop sales were hit particularly hard, with a revenue decline of 25 percent compared to the last quarter, while notebook sales were down 13 percent.

The reduced pay will start from the top, with Hurd losing 20 percent and the Executive Council members facing a 15 percent cut. The remaining executives will see a pay reduction of 10 percent, while base pay for exempt employees will be cut by five percent and non-exempt employees will only see a 2.5 percent drop.

"To give you a little insight into my world, after we report our earnings, we engage in a dialogue with analysts and investors. They’re going to ask what we’re doing in light of the current environment to right-size these businesses," Hurd said. He further explained that he considers the company "fundamentally sound" and that a company-wide workforce reduction is not the best solution for the current situation.

The recession has affected a number of tech-industry giants. Intel recently announced plans to halt production at five facilities, potentially affecting 6,000 workers. AMD is set to cut 1,100 jobs, while also lowering the pay of remaining employees. Microsoft plans to reduce its workforce by 5,000 employees, while Motorola is expected to lay off 7,000 workers.

"Again, there are no guarantees. If the environment gets worse, if the downturn lasts longer than we’re assuming, if our performance declines, we’ll have to reassess," Hurd said. "But for now I believe this is the right thing for the strength of HP."

Boeing issues 1,100 layoff warnings

Boeing issued its second batch of 2009 layoff notices Friday, and for the first time the cuts hit the assembly mechanics and electrical-system installers who actually build the airplanes.

Last month, Boeing had said most of those laid off would be workers who are not directly involved in production.

Of the 1,100 notices given by Boeing, about 700 employees in the Puget Sound region received 60-day layoff notices, including 452 Machinists union members and 40 members of the engineering union. In addition, Boeing said it is not filling nearly 1,000 open positions and will let go several hundred contract employees, most of those in support roles.

Boeing sent layoff notices last month to 190 local Machinists, mostly workers who maintain the factory buildings.

Boeing said in January that it intends to keep building jets at current rates.

In light of that, the shift to cutting assembly workers "just doesn't make sense," said International Association of Machinists (IAM) District President Tom Wroblewski.

"The company tells us they want to build 480 airplanes this year," he said. "They aren't going to do it by cutting these jobs."

"We've got a 787 and 747-8 to build. We've told the company we'll do whatever it takes to roll those out. To get hit with this is just unbelievable."

Bill Dugovich, spokesman for the Society of Professional Engineering Employees in Aerospace (SPEEA), said the white-collar union has identified 153 contractors in the job categories of those SPEEA members in the Puget Sound region who got layoff notices.

"We monitor every one of these layoffs to ensure contractors go first," Dugovich said.

Boeing spokesman Tim Healy said the company, in principle, agrees "that you should get rid of contractors before you get rid of employees with the same skills."

And he said the layoffs aren't a form of retribution against the IAM for the two-month strike last fall.

"We need to put the strike behind us," Healy said. "It wouldn't make sense to eliminate people you need to get the job done."

But he said the company has evaluated the skills it needs in the assembly plants and believes it can still meet its commitments despite the cuts.

Boeing Chief Executive Jim McNerney said in January his goal is to cut 10,000 positions companywide this year through a combination of layoffs and attrition.

Of that total, 4,500 will come from the Commercial Airplanes unit, most of which is based here. The Puget Sound region can certainly expect to take more than half of the companywide Boeing cuts.

The next wave of layoff notices will be issued March 20.

The possibility that much worse could come by year-end was raised by the head of the International Air Transport Association (IATA), Giovanni Bisignani, in remarks to reporters Thursday in New York City.

Trade magazine Flight International reported Bisignani "predicting Airbus and Boeing will fail to deliver more than half of the aircraft they will produce in 2009."

He termed that alarming forecast "a guess," but cited the dire state of the airline industry, the lack of available financing, and also "conversations with several airline CEOs who have confessed that they do not think they will be able to take delivery of all the aircraft they are scheduled to take in 2009."

Both manufacturers have committed to delivering about 480 airplanes this year.

No other industry watcher has suggested that airline customers would be so strapped for funds that half the manufacturers' output could be left parked and unclaimed. The IAM's Wroblewski said such an outcome would be "devastating."

Boeing spokesman Jim Proulx said the manufacturer is working closely with its customers to deliver firm orders and that, at this time, financing sources are sufficient to cover the needs of customers for the year.

Restructuring for RBS; over 20K jobs to go

The Royal Bank of Scotland is all set to go for a dramatic rescue restructuring, wherein assets worth billions of pounds will be put up for sale and there will be more than 20,000 job cuts, media report says.

"The Royal Bank of Scotland (RBS) is to be split into a "good bank" and "bad bank" in a dramatic rescue restructuring in which assets worth several hundred billion pounds will be put up for sale," the Sunday Times said.

Besides, RBS chief executive Stephen Hester will cut costs by more than one billion pound a year, a move expected to lead to 20,000 job losses, more than half of which will be in Britain, the newspaper reported.

The group still employs more than 1,80,000 people around the world, including 1,00,000 in Britain. RBS has already cut more than 12,000 jobs in the past year.     

The report further said "the asset sell-off would be one of the biggest ever seen, and would lead to a substantial reduction of the banks one trillion pound balance sheet."

Meanwhile, Hester is expected to outline his cost cutting plan of over one billion pound this week as he unveils Britain's biggest-ever corporate loss of up to 28 billion pound.

This week's results are expected to confirm a loss of 7-8 billion pound and a further write-down of up to 20 billion pound on its acquisition of the Dutch bank ABN Amro.

Thursday, February 19, 2009

US jobless at 5 million amid recession

The United States on Thursday reported nearly five million people were collecting unemployment benefits, a record high amid the recession, while Britain sought to rally consensus in the battle against the global economic crisis.

Data showed continuing claims for US unemployment benefits rose by 170,000 to 4.987 million for the week ending February 7, another all-time high, the Labour Department said.

The rapid pace of layoffs in the world's largest economy, which has been in recession for more than a year, was evident in initial US jobless claims.

Although initial claims for government unemployment benefits were unchanged at 627,000 for the week ending February 14, the closely watched four-week moving average has now increased in each of the last four weeks, experts said.

Analysts said the continuing claims number spelled bad news for consumer spending, which drives nearly two-thirds of US economic activity.

"Continuing claims are at a record high. They underscore the difficulty in finding a new job at this juncture and make it apparent for many people why they should be saving more money if possible," said Patrick O'Hare of Briefing.com.

"The increased propensity to save bodes well for consumer balance sheets, but it will be a drain on GDP since increased savings means less spending by the consumer," he said.

In further grim data, the first two US regional manufacturing surveys for February point toward a sharp contraction in production, investment and employment, said Ryan Sweet of Moody's Economy.com.

"The surveys also heighten concerns the economy is headed for a deflationary trap," he said.

Deflation occurs when prices decline on a sustained basis, prompting consumers to delay purchases because they expect prices to fall further.

The reports on growing strains in the economy came a day after US President Barack Obama unveiled a 275-billion-dollar housing rescue plan aimed at staving off foreclosures at the heart of the global financial crisis that has morphed into a spreading world economic crisis.

On Tuesday Obama signed into law a 787-billion-dollar stimulus package, another major round in government economic stimulus efforts across the globe that have sparked protectionism charges.

Czech Finance Minister Miroslav Kalousek on Thursday denounced protectionism as "the road to hell" and launched a broadside at the US stimulus package.

"We have to prevent populists from going on with the Buy Czech, Buy American, Buy French campaigns," added Kalousek, whose country took over the EU presidency from France at the beginning of the year.

Both France and the United States have been criticised for their costly plans to help their struggling economies, which some observers described as protectionist.

British Prime Minister Gordon Brown on Thursday met in Rome with his Italian counterpart Silvio Berlusconi as their countries prepare for upcoming Group of 20 crisis meetings.

"We are going to see unprecedented global cooperation over the next few months," Brown said at a joint news conference with Berlusconi.

The G20 finance ministers and central bank governors are to meet on March 14 in Britain, this year's head of the group of developed and developing countries that includes Brazil, India, China and Russia.

The finance meeting will set the stage for a G20 leaders' summit on April 2 in London.

Brown said the summit would aim to strike "a global bargain ... where each continent will make its contribution to the recovery of the world economy.

He warned the new bargain "must include new arrangements for global financial regulation, but recognise that national supervisors are insufficient in a world where there are global capital flows."

Major credit-boosting moves by Japan, which faces its worst recession in decades, underscored the size of the challenges facing the world's leading economies.

The Japanese central bank announced plans to spend more than 10 billion dollars (7.9 billion euros) buying corporate bonds to tackle a credit crunch and painted a sombre picture of the world's second-largest economy.

Bleak corporate news continued to weigh in. The world's biggest reinsurer Swiss Re reported a 2008 loss of 864 million Swiss francs (735 million dollars, 585 million euros) and French banking giant BNP Paribas booked a fourth-quarter loss of 1.366 billion euros (1.7 billion dollars).

BNP Paribas attributed its results to "deterioration in the economic climate in the United States, Spain and Ukraine" as well as to the deepening global financial crisis.

Brazilian aircraft manufacturer Embraer said it would lay off 20 percent of its 21,000 workers because of the "unprecedented crisis hitting the world economy."

Federal-Mogul to lay off 600 workers at Bangalore plant

In what could turn out to be one of the largest retrenchments in the Indian auto sector, global auto parts major Federal-Mogul Corporation is undertaking a massive lay-off in one of its key plants in the country.

The $7-billion US-based company plans to retrench over one-third of its 1,900-odd employees in its Indian subsidiary, Federal-Mogul Goetze, at its Bangalore plant. Initially, it plans to lay off 500 workers in the factory, which is engaged in the manufacture of pistons, piston rings and pins. During the last few months, the company retrenched a few of its key managers in the factory and over 600 contract and casual workers. The Indian arm of the company makes critical parts for Tata Motors’ Nano car and other vehicle manufacturers.
Downturn effect

The spokesperson for Federal-Mogul Corporation, Ms Jennifer Rass, told Business Line that the lay-offs are due to the downturn in the automotive industry and reduction in customer orders. “As a result of the current economic climate and the downturn in the automotive industry, Federal-Mogul Corporation will be adjusting workforce schedules at its global operations to reflect the reduction in customer orders and the need to reduce costs. These schedule adjustments will impact employees in our Bangalore facility, as the company streamlines operations and adjusts to the industry outlook,” said Ms Rass.

An employees’ union spokesperson claimed that the workforce reduction will not be confined to just Bangalore; similar measures are being planned for the company’s other factories in the country. According to him, there are plans to reduce one-third of the workforce from each of these factories. The company, which has about 43,000 employees across 35 countries, has 1,900 employees in its Bangalore plant.
May cut production

Once the workforce is trimmed, the production is expected to come down by half, said company sources. They added that as per the notice filed with the local Labour Commissioner, Federal-Mogul Goetze also planned to cut down the working days by 15 days every month till December this year. It has also offered a voluntary retirement scheme to its employees, wherein Rs 2.5 lakh would be offered to workers who opt for this scheme. Besides, the workers have been asked to surrender their earned leave too.

Federal-Mogul Corporation owns over 74 per cent stake in the publicly listed Federal Mogul Goetze (India), while the rest of the stake is with the public. The company’s shares closed at Rs 34.60 on Tuesday, nearly 1 per cent lower than the previous closing price.

Monday, February 16, 2009

Sun Micro lays off 150 in India

The global layoffs by tech MNCs have started spilling to their Indian operations. IT giant Sun Microsystems reportedly laid off over 150 employees in India around late in January.

According to a news report in a leading daily, most of the laid off employees were software developers working in the company's Bangalore office.

The news report adds that the company may go for another round of lay offs in the last week of February. This round is likely to impact support staff from departments like marketing, human resources and sales.

In November last year, Sun Microsystems announced that it plans to cut as many as 6,000 jobs as the company tries to cope with plunging sales of server computers to financial firms, market-share losses to bigger competitors, and a spiraling stock price.

The reduction, which will eliminate as much as 18 per cent of the staff, will shave $700 million to $800 million from annual expenses, Sun said in an e-mailed statement.

Last week, a Goldman Sachs analyst put the server and software maker's stock on Goldman's `Americas Conviction Sell' list. Goldman analyst David C Bailey said in a client note that Sun's heavy concentration of financial services, telecom and manufacturing customers put it at a disadvantage to its more-diversified competitors. Bailey said that Goldman expects a low double-digit revenue drop at Sun in 2009 due to weakness in several of the company's key verticals and accelerating deterioration of its Unix server market.

Sharp to cut 1,500 jobs

Japan's Sharp Corp said that it would eliminate 1,500 domestic jobs as the

electronics maker predicted its first-ever operating loss
this year due to the recession.

"We have decided not to renew 1,500 contract workers in Japan," Tetsuo Onishi, the company's director for accounting, told a news conference.

"By doing so, we shall build a human resource structure that meets the size of sales," he said. Top managers will also accept pay cuts and forego bonuses, he said.

Saturday, February 14, 2009

Sapient sacks 500 workers, reducing budgets

Technology major Sapient Corporational is latest to join the list of companies going in for large scale lay offs.

In a surprise move it has sacked 500 of its employees in India. Infact no notices were issued to the employees and the company even deployed armed guards to prevent them from turning up for work. In a statement the company has notified the lay offs.

"Businesses worldwide are feeling the impact of the economic downturn and, as a result, are reducing budgets and delaying projects. In order to adjust to this changing demand environment, Sapient has exited about 8 per cent of its people,” the company says.

In fact this is the second time the company has sacked employees. 160 of them were removed just a few months ago.

The senior management of the company refused to comment on the issue. They only said that the sacked employees would get due severance packages and the company would try its best to get them out placements, but they had no choice but to take this drastic step

Thursday, February 12, 2009

Apollo Tyres to lay off 1,500 jobs

Apollo Tyres on Thursday said it is looking at laying off about 1,500 of its workforce.

"We are looking at about 15 per cent of contract and casual labours (for job cuts). We are not going to cut permanent jobs," Apollo Tyres CMD Onkar Singh Kanwar told reporters on the sidelines of the FICCI AGM.

The company has about 10,000 workforce and are looking to cut roughly 1,500 jobs, he said.

On the company's performance, Kanwar said in the current fiscal Apollo will be doing better than the industry average.

India to lose 15 lakh jobs by March: G K Pillai

Tuesday, February 10, 2009

Nissan to cut 20,000 global jobs

Nissan is to cut 20,000 jobs worldwide, 8.5% of its workforce, over the next year because of a sharp fall in sales.

The Japanese carmaker made the announcement as it said it expected to make a loss of 265bn yen ($2.9bn; £2bn) for its current financial year.

Nissan chief executive Carlos Ghosn said the the firm's "worst assumptions on the state of the global economy have been met or exceeded".

"The global auto industry is in turmoil. Nissan is no exception."

Sales slump

Nissan said the 20,000 job cuts would be made between March 2009 and March 2010.
Mr Ghosn has painted a bleak picture

The reduction will see the size of its global workforce fall to 215,000 from 235,000, although Nissan has yet to say which plants will be affected, and by how much.

It added that it would also be talking to unions about cutting working hours.

The company had already announced job cuts last month, including 1,200 at its UK plant in Sunderland.

Nissan also said on Monday that it sold 731,000 vehicles worldwide between October and December, down 18.6% from a year before.

This resulted in a net loss of 83.2bn yen, compared with a 132.2bn profit a year earlier.

Car industry analyst Mamoru Katou said the job losses would make Nissan unpopular in its home country.

"The job cuts will hurt Japanese parts-makers, too, and in the long run diminish the Nissan brand value in Japan," he said.

Nissan's loss for the current financial year will be its first since the 12 months ending March 2000.

Since then Mr Ghosn has managed to turn the firm around, thanks in part to forming an alliance with France's Renault.

Industry-wide malaise

Most of the world's other main carmakers have also seen sales and profits slump as a result of the global economic slowdown.

As a result, there is a growing trend of cutting production and jobs.

Since the start of the year, Honda has announced 3,100 redundancies, while General Motors is reducing its workforce by 2,000.

Other car firms, such as Toyota, Porsche, Honda and BMW, have announced reductions in output as fewer people buy new cars.

GM to Cut 10,000 Jobs Worldwide

Hard times for the auto industry are about to get worse for thousands of workers at the world's second biggest car company.
U.S.-based General Motors said Tuesday it will lay off 10,000 salaried workers. The automaker said the cuts will come from its operations around the world, with more than one-third affecting workers in the U.S.
Last week, GM reported January car sales in the U.S. plunged by 49 percent.
Still, GM's head of global sales, Jonathan Browning, said he expects production of vehicles at the company's U.S. facilities to start increasing. But he cautioned the increase would be the result of "balancing inventory" and not because of a jump in demand.
He also said GM will continue to focus on emerging markets like India and China.
GM's announcement comes on the same day data from China shows that country has overtaken the United States in auto sales - making China the world's biggest auto market for the first time.
The China Association of Automobile Manufacturers said Tuesday China sold some 735,000 vehicles in January, about 80,000 more than the United States during the same month.
Industry analysts said China may have surged ahead in January because of a record slump in U.S. car sales.
They also noted that while both countries have been hit by the global financial crisis, China typically sees a boom in sales in January because of its annual Lunar New Year holiday.
The Chinese government has also been taking steps to boost car sales. In January, the government announced plans to cut the sales tax on small cars in half until the end of 2009.
Last week, GM's executive director of global market and industry analysis said he expected auto sales in China could hit 10.7 million units this year, which is nearly a million more than his estimate for U.S. auto sales.

Thursday, January 29, 2009

AOL CEO fires off lay-off warning

Time Warner’s AOL is to lay off 10% of its 7,000 employees worldwide because of the struggling economy and decline in advertising revenues.

AOL CEO Randy Falco has sent an internal memo confirming that the lay-offs will be rolled out in the coming few quarters. US workforce reductions will be completed by March. He added that the company will eliminate merit pay increases in 2009.

Falco writes: "Online marketers have tightened their ad buying across the board, reducing their spend by hundreds of millions of dollars. As a result, we will be reviewing our entire organisation to further align resources and expenses against the real revenue opportunities in this difficult market. Part of this will involve consolidating groups to gain efficiencies that will unfortunately lead to head-count reductions."

The deal is not expected to affect India. AOL India told IT Examiner, "This is a worldwide phenomenon now. Every company is looking to come up with better profitability and shaping up operational aspects." Senior management officials at AOL India are confident that the lay-offs will not affect its operations India, as the country has a cost advantage compared to locations like the US.

Operational expenses, like frequent trips to the US, have been cut. But there is an intense insecurity among the AOL employees here. AOL had a similar reduction earlier, but it had hardly any impact on India.

While AOL may be considering a sale of Bebo, for now the site is still the centrepiece of its People Networks business.

Falco said, "We combined Bebo with our longtime community assets AIM and ICQ as well as newer acquisitions Goowy, Yedda and Social Thing, to build People Networks, gaining AOL a foothold in the critical social media space, with more announcements to come on the next phase of development in both the social media space and in the integration of social and publishing capabilities."

AOL has been talking to Yahoo and Microsoft about integrating its advertising business with either or both of those companies for a broader reach. Earlier this month, Time Warner Chief Executive Jeffrey Bewkes met Microsoft CEO Steve Ballmer and Yahoo Chairman Roy Bostock at Time Warner's New York headquarters.

The latest move from the company seems to indicate that potential partners are concerned about profitability and operational aspects in these hard times for the online advertising market.

The valuation of the deal is also on the decline. Last week Google recorded a $726 million write-down of its five per cent stake in AOL. The writedown implies that AOL is now valued at around $5.5 billion. In 2005, Google valued AOL at around $20 billion. X

Boeing May Lay Off 10,000 Workers

Boeing executives said Jan. 28 that the company is considering cutting 10,000 jobs.

The Chicago-based defense and aerospace giant announced a loss of $56 million, or 8 cents a share, for the fourth quarter of 2008, though most analysts were predicting a profit of 76 cents a share.

While revenue fell in both the commercial and defense portions of the company, it was the commercial side that got the most attention during Boeing's fourth-quarter conference call.

The loss was due in large part to a strike by Boeing machinists last fall, Boeing executives said. That hurt potential fourth-quarter revenue by $4.3 billion and earnings per share by $1.02, the company said.

James McNerney, Boeing's chairman, president and chief executive, acknowledged that 2008 was a "challenging year," and said Boeing is aiming to cut 6 percent of its workforce while also cutting discretionary capital expenditures and "unnecessary work."

The job cuts will happen through a combination of layoffs, cuts in contract labor, attrition and retirements, McNerney said.

Another hit to fourth-quarter earnings came from delays on the company's 747-8 jumbo jet program. Boeing put the impact to earnings from those delays at 61 cents a share. McNerney said the company underestimated how much engineering work was needed on the aircraft, resulting in "substantial" design changes.

Boeing had revenue of $12.7 billion in the fourth quarter, down from $17.5 billion in the same quarter in 2007. Fourth-quarter earnings were $1.36 a share in 2007.

In contrast to the commercial division, Boeing's defense division had a much smaller drop in revenue. In defense activities, which make up roughly half of Boeing's business, fourth-quarter revenues were $8 billion, down from $8.4 billion a year ago. Executives highlighted international contract wins, such as agreements to sell P-8 maritime patrol aircraft to India and C-17 transport planes to NATO.

McNerney also said Boeing is sticking to the schedule it issued in December for the 787 Dreamliner, with the first flight planned for the second quarter of 2009, despite delays from the machinists' strike and the need to replace certain fasteners. Boeing plans to produce 10 787 airliners a month in 2012. The backlog for the 787 is about 900 planes, McNerney said.

Boeing's total backlog at the end of 2008 stood at $352 billion, $73 billion of which was for the company's defense division.

McNerney said Boeing is expecting more pressure on defense budgets in the United States and other countries because of spending on economic recovery programs. Moreover, financing for airplanes continues to be challenging, he said.

There were six order cancellations in Boeing's commercial division in 2008, and about 110 aircraft deferrals, but there will likely be more cancellations and deferrals in 2009, the CEO said.

"We are indeed facing one of the more difficult commercial and financing markets that most of us have ever seen," McNerney said. "However, we have a solid foundation from which to work through this environment, with half our business in defense, strong commercial products and a large backlog. Equally important is the fact that the actions we are taking now are not business as usual."

McNerney said Boeing is working to reform its operating model to move away from business units operating as "islands."

He said the company "waited too long" to integrate functions that span the entire company and foster the sharing of best practices. Boeing has already started doing that, with reorganization in its commercial airplanes business late last year, but more changes will come, he said.

Within the commercial division, "We are reintroducing rigorous functional discipline, with clear lines of sight and accountability and tighter integration to program, business unit and corporate decision making," McNerney said. "It's time to end the era where development programs were stood up to operate as islands of their own. While this structure served a purpose to foster the kind of tremendous innovation like the 787, our recent experience has shown it to do so at the expense of execution and predictable performance."

Global layoffs hit India as well

It was a bloody Monday in the US with thousands of people being laid off. As the economy slows down, India has not remained insulated.

Multinational companies, outsourcing companies have started laying off people. Others have ordered a freeze on hiring.

It's been six months since Jayesh Gholap, a computer engineer lost his job. The knowledge process outsourcing firm he worked in, shut when the US company it served went bust six months ago.

"First thing that hit me was when is the next bill, the next EMI due. Getting a new job, getting used to it is not easy," said Jayesh Gholap, computer Engineer.

Everyday, there are fewer and fewer jobs to go around. On Monday seventy thousand people were laid off in the United States. And India is not insulated.

One more multinational company Unilever has announced plans of cutting costs. In a letter to its employees, the company has warned of job cuts across its subsidiaries globally and India too will be impacted.

The numbers are reflected in the job applications by people already laid off. At an HR firm ABC consultants, 25 per cent of applications are from people who have lost jobs.

"There is a hiring freeze. They are not filing existing positions and letting natural attrition happen. Another aspect is performance appraisal has become stronger and taken a whole new meaning, instead of half yearly it has become quarterly," said Shiv Agrawal, consulatant.

In a global economy several jobs in India like those of Gholap depend on the conditions abroad.

After freeze on hiring and tougher performance appraisals, jobs across the world including India will face a tough test for survival.

Wednesday, January 28, 2009

Microsoft layoff: Desi techies target?

Indian IT professionals working for Microsoft Corp in the US could be among those who lose jobs after it announced plans to sack 5,000 employees with the software giant indicating some of the affected would likely be non-Americans amid calls to first target foreigners working on H-1B visas.

The world's biggest software company has been asked by an influential Republican Senator from Iowa Chuck Grassley to first fire foreign workers hired on H-1B visas, a majority of whom are Indians, while implementing the layoff plan and "protect" the jobs of Americans.

An indication that foreigners who also include Indians could be targetted during the layoffs came when a Microsoft spokesperson in a statement said, "We care about all our employees, so we are providing services and support to try to help every affected worker, whether they are US workers or foreign nationals working in this country on a visa."

The company has been in the forefront for expanding the H-1B visa programme, a temporary visa programme that lets American companies and universities hire thousands of foreign workers in a category considered by the government requiring specialised skills.

Dashing off a letter to the company after it recently announced its intention to slash the workforce by 5,000 in the next 18 months, Grassley voiced concern that this would result in American workers losing jobs and not the foreigners hired on H-1B or L visas.

"During a layoff, companies should not be retaining H-1B or other work visa programme employees over qualified American workers," Grassley said in the letter to Microsoft Chief Executive Steve Ballmer.

Microsoft is one of the major beneficiaries of H-1B work visa programme, which is mainly for overseas professionals. A majority of the 60,000 professionals given H-1B visa every year are from India.

SAP to cut 3,000 jobs

Software maker SAP AG said that it would cut 3,000 jobs worldwide as its 2008 net profit fell 2 per cent, weighed by a difficult year-end when the financial crisis deepened.

The software giant has declined to forecast revenue for 2009 and said that it would accelerate cost cuts to handle what it called a "challenging operating environment" this year.

SAP, the world's biggest maker of business management software, said in a statement that 2008 operating profit rose 4 per cent to 2.84 billion euros ($3.75 billion) and total sales for the group gained 14 per cent to 8.46 billion euros.

The sales number was exactly in line with the average in a Reuters poll of analysts. The Walldorf-based company had told investors on October 6 that business suddenly fell off in the closing two weeks of its third quarter, which ended September 30.

Its closest competitor, US company Oracle, in December posted second-quarter results that were better than feared and gave investors reason to hope that Oracle would manage the economic slowdown relatively well.

SAP is valued at around 13 times estimated 2009 earnings compared with a sector average of 11, according to Reuters data.

Infy puts over 5K jobs under scanner

The economic crisis seems to be deepening and with it the layoff count. The latest round of bad news comes from India's second largest IT services provider, Infosys, who till now claimed to have stayed away from layoffs.

According to reports, the company has put at least 5,000 employees or 5 per cent of its total global workforce under the performance scanner. Media reports also suggest that the company has asked senior managers (project managers, senior and group project managers, delivery managers) to give lowest performance rating (4 on a scale of 1-4) to the 'underperforming' 5 per cent as a part of its consolidated relative ranking (CRR).

Incidentally, while lowest rankings are not new in the company, this is the first time that Infosys has made it compulsory.

Some 40-50 sales executives have also been reportedly asked to quit in the last two months. Most of these were located in the US and were from consulting background who are in a client-facing role.

The company, however, claims it to be a usual process. Its Group HR head said that there was no change in the policy, and the percentage of employees who are ranked four in the scale varies every year between one percent to five percent.

The official said that the company has decided to implement a six-month mentoring programme for these employees after which it will decide their future based on the improvements they have made. As a part of this programme, each affected employee will be asked to work under the supervision of a mentor who is a senior executive.

During this period, the employee will not be given any important assignment, though he will be allowed to work on his present project. If the concerned employee is on bench, he will give all his time for the mentoring programme.

Last year, Infosys' rivals TCS, Wipro and Satyam too axed a sizeable number of jobs terming them `performance-based'.

Indian companies lay off expat executives

As part of cutting costs in a tough economic situation, Indian companies have started showing door to highly-paid expat executives. Most of the companies now seek people for higher positions from inside the country itself as it would be less expensive
compared to hiring expats, reported The Economic Times.

K Sudarshan, Managing Director, executive search firm EMA Partners' India unit said, "Many of the expatriate executives, who have been asked to leave, are subject experts. Their value diminishes in a downturn as companies are no more expanding, and thus don't need people to guide in a new venture."

Since last few months, some companies have replaced their expat executives by Indian ones at the senior level. For instance, Aviva Life Insurance removed Bert Paterson and appointed former Citibank executive TR Ramachandran as the CEO for its Indian operation. Another Insurance firm Metlife replaced its CFO Nick Paket with an Indian hire. Aditya Birla Retail is reportedly hiring an Indian executive from a beverage company to head its supermarket chain, More, which was earlier led by Andrew Denby. Dabur Retail replaced its three expats, including CEO Peter Baker with Indians.

Expats were in big demand during the boom period of 2003-07, as Indian companies expanded rapidly and diversified into new sectors.

Most of these expatriates drew high salaries as compared to their Indian counterparts. "At least in one case, an expat CEO who was heading a sunrise foray of an Indian company was getting paid Rs 4 crore per annum, twice the amount that was being paid to his Indian counterparts," said an executive search professional, who requested not to be named.

Economic crisis to trigger more job loss in '09: ILO

The global economic crisis is expected to lead to a "dramatic increase" in the number of people joining the ranks of the unemployed and working poor and those in vulnerable employment, says the International Labour Office (ILO).

Global unemployment in 2009 could increase over 2007 by a range of 18 million to 30 million workers, and more than 50 million with the situation likely to deteriorate, the ILO said in its annual Global Employment Trends report released on Wednesday.

Based on new developments in the labour market, the report said some 200 million workers, mostly in developing economies, could be pushed into extreme poverty if the situation worsened.

"The ILO message is realistic, not alarmist. We are now facing a global jobs crisis. Many governments are aware and acting, but more decisive and coordinated international action is needed to avert a global social recession," ILO Director-General Juan Somavia said in a statement from Geneva.

The latest report said that based on November 2008 IMF forecasts, the global unemployment rate would rise to 6.1 per cent in 2009 compared to 5.7 per cent in 2007, resulting in an increase of the number of unemployed by 18 million people in 2009 in comparison with 2007.

If the economic outlook deteriorates beyond what was envisaged in November 2008, "which is likely", the global unemployment rate could rise to 6.5 per cent, corresponding to an increase of the global number of unemployed by 30 million people in comparison with 2007, it said.

Tuesday, January 27, 2009

IBM quietly cuts thousands of jobs

With the recession forcing tech companies to announce thousands of layoffs, IBM Corp. is joining the fray — but not advertising it.

The Armonk, N.Y.-based company has cut thousands of jobs over the past week, including positions in sales and the software and hardware divisions. IBM says the cuts are simply part of its ongoing efforts to watch costs, and the company won't release specific numbers, even as reports of firings stream in from IBM facilities across the country.

Workers have reported layoffs in Tucson, Ariz.; San Jose, Calif.; Rochester, Minn.; Research Triangle Park, N.C.; East Fishkill, N.Y.; Austin, Texas; and Burlington, Vt.

Meanwhile, other tech companies such as Intel Corp., Microsoft Corp., Texas Instruments Inc., Sprint Nextel Corp. and Google Inc. have all publicly revealed job cuts as part of their strategies for riding out the economic crisis. More than 20,000 jobs will be lost from those companies alone.

One of IBM's biggest rivals — Hewlett-Packard Co. — is also laying people off. HP is shedding 24,600 jobs, nearly 8 percent of its 320,000-employee work force, as it digests the acquisition of Electronic Data Systems Corp.

IBM says it doesn't have to reveal the number of jobs it is cutting, since the Securities and Exchange Commission requires companies to disclose only "material" events. And IBM considers its job cuts a regular part of the company's business model, since thousands of jobs are cut every year but are usually added back in other places.

Because of that, IBM contends it doesn't have to break out its layoffs in regulatory filings unless it suddenly changes course and makes substantially more or fewer job cuts.

That's why while IBM's head count keeps growing, topping 400,000 at the end of 2008, laid-off IBM workers have flooded online job boards with complaints about the company's stealth cuts.

One estimate of IBM's recent cuts put the number at more than 4,000 jobs lost since IBM's fourth-quarter earnings announcement last week. Those earnings contained an unexpected surprise: IBM forecast at least $9.20 per share in profit in 2009. IBM shares are up more than 10 percent since then.

To get the cost savings that will help spur the higher profits, IBM appears to have acted quickly. The estimate of at least 4,000 jobs cut comes from AllianceAtIBM, a union that is affiliated with the Communications Workers of America and represents a small number of IBM workers.

The Associated Press reviewed one document sent to laid-off workers that identified some of the positions that were cut. Employees weren't identified by name, but positions and the workers' ages were listed. The document listed nearly 3,000 jobs.

In Vermont, IBM remained tightlipped about layoffs at its Essex Junction facility, but state Labor Commissioner Patricia Moulton Powden said the total number would be less than 500.

IBM recently employed 5,300 workers at the Essex Junction plant, down from 8,500 in 2001.

Jim Gallo, 48, who said he worked in IBM software support for 27 years, was among those let go from that facility. Gallo, drinking a Grey Goose and ginger ale at nearby Lincoln Inn on Tuesday, said he hadn't told his four children yet.

He said he has until Feb. 26 to find another job in IBM, but he put his chances at "slim to none." Gallo said he gets six months' pay as part of a severance package.

"It's too bad they're not doing what they were doing before. They offered some sweet packages for people to jump out," he said.

IBM's ongoing labor adjustments have led the company to add bodies in cheaper and higher-growth parts of the world, like India.

In 2007, the last full year for which detailed employment numbers are available, 121,000 of IBM's 387,000 workers were in the U.S., down slightly from the year before. Meanwhile, staffing in India has jumped from just 9,000 workers in 2003 to 74,000 workers in 2007.

Over 50,000 job cuts in the US | 'Bloody Monday'

Tens of thousands of job losses were announced in the US on Monday. American economists say they expect the recession to worsen this year.

US heavy vehicles maker Caterpillar said it would cut over 20,000 jobs to deal with the challenging global business environment.

The company had earlier announced axing 15,000 workers in 2008. The people who will lose their jobs amount to about 18 per cent of the company's total workforce. Caterpillar currently employs about 1,13,000 workers.

Last week, Microsoft said it would cut 5,000 jobs over the next 18 months.

Research-based biomedical and pharmaceutical company Pfizer/Wyeth has announced a layoff of 20,000 workers while Texas Instruments will axe 3,400 employees.

In Europe too, more than 10,000 job cuts have been announced.

Financial firm ING has announced that 7,000 employees will be sacked.

Other companies that have recently announced job cuts include electronic giant Philips which will axe 6,000 workers and UK's steel manufacturer Corus which will layoff 3,500 among others.

Hoping to deal with the financial crisis soon, US President Barack Obama is lobbying for a quick Congressional passage of his $825 billion stimulus package.

Monday, January 26, 2009

Caterpillar, others unveil massive job cuts

A tidal wave of layoffs washed across the world on Monday, sending tens of thousands of workers into joblessness as the pain of the global recession worsened.

Amid reports of tumbling corporate profits, dire outlooks and a lowered global growth forecast from the International Monetary Fund, companies in Europe and the United States announced they would cut vast numbers of employees in a dramatic effort to reduce costs and keep their businesses afloat.

Despite the corporate gloom, markets rallied on some of Monday's other news: No. 1 drugmaker Pfizer said it would buy rival Wyeth for $68 billion, Barclays said it had no need to raise capital, and sales of existing U.S. homes unexpectedly rose 6.5 percent.

"In the midst of a global recession, here is Pfizer, hopefully spending their dollars wisely," said Andre Bakhos, president of Princeton Financial Group in New Brunswick, New Jersey. "It adds a little confidence that all is not lost."

Monday's layoff announcements, affecting more than 70,000 workers, started in Europe, with electronics maker Philips announcing 6,000 job cuts as it posted a bigger-than-expected 1.5 billion euro ($1.9 billion) loss, its first quarterly loss since 2003.

ING cut 7,000 of its 130,000 jobs, replaced its CEO and got guarantees from the Dutch government as other European banks sought to reassure investors they are coming to grips with the turmoil in financial markets.

Corus, Europe's second-largest steelmaker, said 3,500 jobs would go worldwide, including 2,500 in Britain, as the company, owned by India's Tata Steel, sought to boost operating profit.

CATERPILLAR, SPRINT, HOME DEPOT

In the United States, Caterpillar, the world's largest maker of heavy equipment, said it would eliminate nearly 20,000 jobs, reported a 32 percent drop in profit and forecast the weakest year for business since the end of World War Two.

Sprint Nextel Corp the No. 3 U.S. mobile service provider, said it will cut up to 8,000 jobs, or about 14 percent of its workforce. Retailer Home Depot Inc said it will cut 7,000 jobs, or about 2 percent of its workforce.

The International Monetary Fund slashed its forecast for 2009 global growth to 0.5 percent from 2.2 percent in last economic outlook in November, a source told Reuters.

Stock markets rose, with Europe's FTSE 300 index up 3 percent and major U.S. indexes up more than 1 percent. The Dow Jones Industrial Average was up 1.1 percent. Bond prices fell as the rise in existing-home sales raised questions whether the housing market was as weak as thought.

Gold climbed above $900 an ounce, the highest in more than three months.

Although it did not announce job cuts, Dubai-based DP World, which operates 48 marine terminals and 13 new port developments in 31 countries worldwide, said it was putting all expansion projects under review and would cut costs and freeze recruitment as growth slows in 2009.

"The economic environment remains extremely fragile," said Commerzbank equity strategist Hans-Juergen Delp.

Meanwhile, the credit crunch claimed the government of Iceland, which Prime Minister Geir Haarde said had fallen apart under the pressures of the financial crisis.

The Norwegian government was forced to dip deeper into its reserves and presented a $2.87 billion fiscal stimulus package to prevent unemployment surging.

"This is the most ambitious fiscal stimulus proposed in more than 30 years to boost growth and employment," Finance Minister Kristin Halvorsen told parliament.

Banks have borne the brunt of the credit crisis, which was sparked by mass defaults on U.S. home loans. The sector has seen a wave of consolidation as leading banks around the world have collapsed or been taken over.

But shares in Britain's Barclays leaped by 73 percent after it said its projected 2008 pretax profit of more than 5.3 billion pounds ($7.3 billion) would include significant writedowns of 8 billion pounds and that the bank had made a good start to 2009.

British shoe retailers Barratt and Priceless, with 400 stores and 5,450 workers across the country, went into administration in the latest sign of the consumer slowdown.

Japanese stocks closed at their lowest in almost three months.

Sunday, January 25, 2009

India's outsourcing sector faces bleak outlook: analysts

India's software sector, reeling from a huge accounting fraud in one of its flagship companies, faces further problems as US firms scale back in a troubled global business environment, analysts said.

Two of India's top IT companies -- Infosys Technologies and Wipro -- have acknowledged that their revenues are under pressure.

Meanwhile, India's largest software exporter Tata Consultancy Services (TCS) saw its third-quarter net profit rise by a lower-than-expected 1.57 percent from a year earlier because of the global economic slowdown. It traditionally gives no guidance.

The flurry of dismal earnings news and a one-billion-dollar false accounting scandal at Satyam Computer Services earlier this month has combined to cool investor sentiment towards the once red-hot sector, which employs two million workers in India.

"We're seeing a clear slowdown for the IT giants (in the latest quarter) and it's not a surprise," said Apurva Shah, head of research at brokerage Prabhudas Lilladher.

Brokerage firms and analysts say the outlook appears bleak for the top IT companies for at least the next two quarters.

"The near-term outlook for India's IT sector is cautious and uncertain," said Harit Shah, software analyst at Angel Broking.

"Revenue visibility has become hazier than ever. With the US economy likely to undergo an extended period of painful transition, any recovery is likely to take some while," Shah said.

Infosys chief executive S. Gopalkrishnan said last week the budgets of overseas clients would be clearer by mid-February and they were expected to be "slightly less or flat".

TCS does not forecast revenues but admitted it was "operating in a challenging environment".

Infosys Technologies and Wipro said they lowered revenue guidance in their latest earnings forecasts because of the global economic situation.

Infosys' full-year dollar guidance was cautious with revenues expected in the 4.67 billion dollars to 4.71 billion dollar range -- representing growth of 11.8 to 12.8 percent, a far cry from earlier growth of plus 30 percent.

Meanwhile Wipro this week lowered its revenue guidance for the next three months to 1.04 billion dollars -- below the 1.12 billion dollars it notched up in the three-months to December last year.

"While Infosys has twice cut its annual guidance in the year to March 2009, Wipro commented on the difficulty in giving guidance even for a quarter," said analyst Abhiram Eleswarapu of BNP Paribas.

"We continue to be skeptical about Wipro's prospects" as its clients "continue to face turmoil," an analyst with BRICS Securities added.

Meanwhile, the National Association of Software and Services Companies (NASSCOM) lobby group has now delayed its growth forecast for India's IT sector for the year to March 2010 due to the Satyam scandal.

India's business community has been rocked by Satyam founder B. Ramalinga Raju's declaration on January 7 that he had fudged the company's accounts for years and that one billion dollars in cash on its books was non-existent.

A new set of auditors are now restating its earnings.

Uncertainty in the sector's future business volumes could be compounded if outsourcing laws undergo a change now that Barack Obama has been installed as the 44th US president.

During his election campaign, Obama said he would offer incentives to companies that created jobs at home and halt tax breaks to those that ship work abroad.

Close to four-fifths of the world's biggest companies outsource work to India, with about 60 percent of the contracts coming from the United States.

However, India's IT firms have brushed off concerns that Obama would formally seek to curtail outsourcing.

NASSCOM has said it believes that these fears are unfounded, despite Washington's efforts to boost job opportunities at home.

Microsoft To Cut 5K Jobs, No Job Cut In India

Microsoft would cut up to 5,000 jobs in R&D, HR, Marketing, Sales, Finance, Legal and IT over the next 18 months, a company statement said. However, the Indian operations would not be impacted and there would not be any job cuts in India, PTI reported quoting a Microsoft India spokesperson.

The company is reducing head-count-related expenses, vendors and contingent staff, facilities, capital expenditures and marketing to control costs, estimating further deterioration in global economic conditions. The company's profit declined 11% in the second quarter.

Tata Steel's Corus to cut up to 3,500 jobs: report

Steelmaker Corus is poised to axe up to 3,500 jobs next week, The Sunday Times reported.

The precise number of lay-offs at the Anglo/Dutch steelmaker, owned by India's Tata Steel, were being thrashed out over the weekend, according to the paper.

The job cuts are part of a long-term restructuring drawn up by outgoing chief executive Philippe Varin, but it has been accelerated by the crisis in the global steel industry, the paper said.

Thursday, January 22, 2009

Recession hit Microsoft to cut 5,000 jobs

Microsoft Corp shocked Wall Street on Thursday with disappointing results and said it would slash up to 5,000 jobs and stop offering profit forecasts for the rest of the fiscal year.

The world's top software maker blamed the weakness of the PC market and the popularity of low-cost netbook computers for the miss.

Its shares fell 8 per cent in early trading. Microsoft posted a profit of $4.17 billion, or 47 cents per share, in its fiscal second quarter ended December 31, versus a profit of $4.71 billion, or 50 cents, a year earlier.

Analysts were looking for earnings per share of 49 cents, according to Reuters Estimates.

Revenue rose 2 per cent to $16.63 billion, missing the average analyst forecast of $17.1 billion. “Clearly business conditions are worse than people were expecting,” said Richard Williams, analyst at Cross Research.

“This is a substantial amount of jobs cuts. Microsoft has never had a layoff like this in my knowledge and it's sending a signal that the times are definitely changing.”

Microsoft said it will eliminate up to 5,000 jobs in research and development, marketing, sales, finance, legal, human resources and information technology over the next 18 months, including 1,400 jobs on Thursday.

That amounts to about 5 per cent of its estimated 95,000 work force. Microsoft said these moves would help cut its annualized operating expense by about $1.5 billion and reduce fiscal year 2009 capital expenditures by $700 million.

The company will also cut travel spending by 20 per cent, eliminate merit salary increases in September, and significantly reduce spending on vendors and contingent staff.

It also plans to scale back budgets for marketing and the expansion of its Puget Sound campus. “Economic activity and IT spend slowed beyond our expectations in the quarter,” Chief Financial Officer Chris Liddell said in a statement.

“We are planning for economic uncertainty to continue through the remainder of the fiscal year, almost certainly leading to lower revenue and earnings for the second half relative to the previous year.”

Shares of Microsoft fell to $17.84 in early trading on the Nasdaq, from their previous close of $19.38.

Friday, January 16, 2009

Motorola to Lay Off 4,000, plans to close India sales unit

Mobile phone maker Motorola has decided to close down its distribution division in India, owing to tumbling sales and aggressive competition. Distribution activities are now likely to be carried out from its Singapore offices.

This decision is in line with the company’s recent 4,000 job cuts, more than 3,000 of which will come from its ailing handset unit. A senior Motorola India official confirmed Motorola's plans to close the unit.

The handset maker has reportedly informed about 150 employees about the move. As of now, few employees in the distribution segment are likely to get pink slips, but there will be a knock-on effect further up the chain, with job cuts in other business segments, including research and development.

Rather stiffly, Motorola told IT Examiner, "While Motorola has a strong global brand as well as a solid balance sheet and cash position, the company is not immune to the currently weak global economy. Motorola continuously reviews our business and the market to ensure that our resources are aligned with market conditions, and that we are focused on our top strategic priorities. We are working diligently to improve the profitability of our business and are committed to delivering a strong portfolio of exciting new products in 2009 and beyond."

Chopping salespeople is not confined to India, as yesterday it was reported a similar move in the UK, where is has cut its sales team to two.

Motorola yesterday announced plans to lay off a further 4,000 staff, and warned it was likely to report a fourth-quarter loss.

Motorola has been losing out lately to stiff competition in the mobile handset market, with its number two position taken over by Samsung recently. The last quarterly results reflected a drastic slide in its sales on both a year-on-year and a quarter-on-quarter basis. It recorded sales of 19 million units, down from 25.4 million in the previous quarter and 40.9 million units in 2007.

Motorola tasted success on Indian soil with the launch of Moto Razr in 2005, but since then the graph has been in decline. X

Sun Microsystem to lay off staff in India, no fresh hiring in 2009

Santa Clara-based $13.88 billion Sun Microsystems will lay off staff in India Coming to terms with lay-off as part of its plan to cut 6,000 jobs globally. company employs some 33,423 people worldwide. While the company is yet to decide the exact number of job cuts in India, it has no plans for fresh hiring in 2009.

The company, which operates in more than 100 countries around the globe, employs some 1,300 people in India.

"The number of job cuts in India will be minimal as the country is projected as one of the emerging markets along with Brazil, Russia and China. Fresh hiring will hardly be there. We may look at some sporadic hiring as and when required," Mr Anil Valluri, vice-president & managing director of Sun Microsystems India, told ET.

In India, the company is also reorienting its business strategy to earn better revenues during this ongoing recessionary period.

"Our focus is now more on public sector units as there is hardly any cost cutting in the government sector. Earlier, PSUs contributed some 20-25% of our revenues and the rest came from the private sector. But, in 2009, we expect some 40-45% of our revenues to come from PSUs," said Mr Valluri.

Incidentally, some of the leading PSU clients of Sun Micro are Punjab National Bank, Vijaya Bank, Dena Bank and others in the banking sector.

"The telecom sector is also adding subscribers and, therefore, there is business being generated, too. Public sector telecom giants like BSNL and MTNL are two major sources of business for us," he added.