PM's plea has no credit; Amex cuts jobs

Credit card company American Express has asked some of its senior managerial employees to quit as part of its strategy to save costs.

The layoffs are primarily in Delhi and Bangalore and all the employees who have been asked to quit have been with Amex India for the past 15 to 20 years. Amex India has hired a consultancy to help sacked employees find a new job. The company currently has around 6,000 employees in India.

PTI reports the company is believed to have handed over pink slips to about 200 employees and senior executives.

The report on layoffs comes on a day when Prime Minister Manmohan Singh asked Indian companies to "refrain from large-scale lay-offs". Singh on Monday warned industry leaders that layoffs may lead to a “negative spiral”.

"While every effort needs to be made to cut cost and raise productivity, I hope there will be no knee-jerk reaction such as large-scale layoffs, which may lead to a negative spiral," Singh said on Monday.

American Express confirmed that it would cut jobs in India but said it cannot give a specific number. “Approximately 7,000 jobs are being eliminated company-wide which translates into about 10 percent of the company's worldwide workforce,” the company said in a press statement.

"While we cannot give you specific numbers for India, we can tell you that we (Indian operation) are not the main focus for restructuring," it said. "Reduction will occur throughout the company and across business units, markets and staff groups, primarily focusing on management and other positions that do not interact directly with customers."

American Express, last week, announced it would lay off 7,000 employees—about 10 per cent of its worldwide workforce—to save $1.8 billion in costs in 2009.

PTI reports the company would also suspend management-level salary hikes for the next year and curtail hiring.

Jet Airways was last month was forced to withdrew its decision to sack 1,900 employees.

‘IT jobs are in jeopardy’

“We’ll get back to you.”

“We’ll let you know soon.”

Such faux promises are beeping out with increasing frequency to engineering graduates who were offered jobs by information technology companies over a year and a half ago.

That’s diplomatese — for telling the hiress to forget about the offers and start looking for other jobs, consultants say.

T. Muralidharan, chairman and managing director of Hyderabad-based talent management and talent acquisition company TMI group, says officially, no company can revoke an offer it made as its reputation will be marred. “The policy of companies is not to revoke offers, but postpone them indefinitely,” he adds.

Indefinite postponement of joining dates means the prospective employee won’t be taken this year at least. Recession last year, coupled with investment banks going bust, has hurt the business of IT firms as these banks form a major chunk of their clientele. This has led to an unofficial freeze on taking new people on the rolls.

Take 23-year-old Rashmi Shah, an engineering graduate from a Bangalore institute. She told DNA Money that in 2007, she received an offer from a top-ranking IT company in the country. Her joining date, which was sometime in June this year, was extended indefinitely.

“It’s October, and there’s no news from them. Whenever I call the company, the only thing I hear is ‘we’ll get back to you’. Initially I believed them, but now I know nothing will come out of this offer,” rues Shah.

She’s now planning to go in for a masters of computer application (MCA), and simultaneously look for jobs “elsewhere”, “maybe BPOs or the manufacturing sector”.

IT firms such as TCS and Infosys have said that this year, they would hire 30,000 and 25,000 people, respectively. Others like Wipro will hire about 15,000.

But these figures suggest only the number of offers that will go out and not necessarily the number of those who will start working with the companies this year, say HR consultants.

In 2007, these very companies had said that they would be hiring upwards of 30,000. For offers made in 2007, joining dates were to be in June 2008.

But the offer letters are collecting dust as postponements abound. “Some of my batchmates and I have accepted that nothing would come out of the offers that were made last year by this Bangalore-based software company. So, some of us are planning to go in for further studies while the rest are hunting for sales and marketing jobs,” says an engineering graduate from Dr Ambedkar Institute of Technology in Bangalore.

Experts say that of the nearly 1,00,000 offers that were made by big and small IT firms last year, only about 10,000 people have actually started work till now. “Jobs in IT are in jeopardy,” says Kris Lakshmikanth, founder chief executive officer and managing director of HR consultancy HeadHunters India.

TMI’s Muralidharan adds that indefinite delay in joining is unfair, as the remuneration loses meaning with time. “Offers were made to engineering students in 2007 and they were to join in June 2008. But 2008 is nearing end and there are no signs of joining dates. Some companies mention the salary in offer letters. How can a remuneration decided in 2007 hold importance nearly two years later?” he asks.

1,59,000 jobs lost in US in a month

As many as 1,59,000 jobs were cut in the US in September, the worst ever retrenchment in a month for five years, the government has reported, heightening fears that the economic downturn was worsening and could persist well into next year.

The job loss has continued for nine consecutive months totalling 7,60,000 in the period, according to the Labor Department's report released Friday. In the last couple of weeks many people also had to leave work as several Wall Street institutions collapsed.

"We've lost jobs in nearly every area of the economy, and this is going to get worse before it gets better because the credit markets have deteriorated basically on a daily basis for the last few weeks," Michael T. Darda, chief economist at MKM Partners, a research and trading firm in Connecticut, was quoted as saying by the New York Times.

Though the financial bailout plan cleared by Congress and signed into law by President George W. Bush Friday may restore order in the financial system, it will take time for its effect to be felt.

In a chain reaction, housing prices continue to fall, eroding household wealth just as millions are trapped in unmanageable debt. The shrinking job market has taken many paychecks out of the economy, forcing people to rethink thrift, resulting in reduced sales from car showrooms to hair salons.

Till only a few weeks ago, many economists held hopes of the economy recovering late this year or early next year. But now with the job market contracting faster, and fear dogging the financial system, 2008 is seen as a lost cause.

The more pessimistic analysts don't mind using the word 'recession'.

"This is an economy in recession, and every dimension of the (labour) report confirms that," said Ethan S. Harris, an economist at Barclays Capital. "This has been preceded by a slow-motion recession. Now we're going into the full-speed recession that will last somewhere between three and five quarters."