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.

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.

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.