Work Shop Blues

How it’s hurting

• Jobs have shrunk by 20-25% across most sectors as firms look at cutting costs.
   
• Attrition rates have crashed to 16-18% as people prefer holding on to jobs.
   
• Over 50% of companies looking at lower salary hikes for employees.
   
• Fresh hiring at middle- to senior-level most hit, top levels are likely target for the costs axe.
   
• Existing, new jobs at stake in any business that requires money to be put in or is making losses.

Who It’s Hurting

• Badly Hit: Banking and financial services, real estate, construction, IT, BPO, new telecom players.
   
• Somewhat Hit: Manufacturing, consumer durables, auto, retail.
   
• Not yet hit: FMCG, media and advertising, pharmaceuticals, hospitality, agri-business, lifestyle.

Where It’s Hurting

• Only Class-III cities saw some jobs growth; all other classes saw negative growth.
   
• Employment outlook in Hyderabad, Pune is positive, but negative in Delhi, Mumbai, Bangalore, Chennai, Calcutta, Ahmedabad.

Sources: Hewitt Associates, Teamlease, industry estimates

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"We’re not building headcount, for we have no plans to add branches. This year we are looking at consolidating business."
Shikha Sharma, ICICI Prudential

"Till recently, there were more jobs chasing fewer people and most candidates had 2-3 offers. Now, that’s not happening."
Som Mittal, Nasscom president

"Over the next six months at least a million jobs in construction and real estate are likely to be jeopardised."
N Hiranandani, MD Hiranandani Const.

"We continue to expand at 50%, so we’re still hiring at the front-end. Even so, we are streamlining processes internally."
Kishore Biyani, chairman, Future Group

"Some people in the banking and financial sector were making too much money. There was no rationale for it."
Rahul Bhasin, Barings Private Equity

"We are not seeing people getting sacked yet. Early signals do point to it but not on Naukri.com yet. Let’s wait three months."
Sanjeev Bhikchandani, CEO InfoEdge

"It sounds like a morgue for some sectors. Everybody is groping around, but nobody seems to have any answers."
Vikram Chhachhi, director, Accord Group

"We will see more low-cost hires against high-cost ones as most companies would be looking at consolidation."
Ganesh Shermon, KPMG

"There will be complete and indiscriminate misuse of the law to hire and fire, as just seen in the Jet Airways case."
Nilotpal Basu, CPI (M) MP

"There’s bound to be a slowdown in recruitment by many retailers for lack of liquidity. Expansion plans may be put off. "
Arvind Singhal, chairman, Technopak

"Firms that wait will go under. The domestic market is essential. Roles will have to stretch more. We have to brace up."
Deep Kalra, CEO, Makemytrip.com

"Hiring completely depends on where a bank is in its life cycle. Quite clearly, this is the right time to scout for good talent."
Rana Kapoor, CEO, Yes Bank

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Many of Mumbai’s cubbyhole production houses are sending employees out on three-month, "let’s see how things work out" vacations, some of them without pay. Well-heeled armies of consultants are diligently reporting at work—and finding there’s only so much cooler-talk you can do in a day. Others aren’t so lucky: Rohit Sharma’s software employer in Delhi has gently advised him to work from home. His salary hasn’t been cut yet, but he’s definitely losing out on some benefits.

Nervous employees on the frontline of any firing spree are flocking to the Internet to share sob stories. In an e-mailed response, the editor of the year-old website, www.workexp.com, run anonymously to encourage employees to disclose dirty boardroom secrets, said that it had over the last three months received "in excess of 500" posts related to retrenchment, mostly from India. The website posted less than 10 per cent of the mails about job losses or pay-cuts. On average, the website receives 15-30 posts a day.

Clearly, India Inc’s jobs party has come to a grinding halt. As companies digest the double whammy of the global financial crisis and a slowdown at home, hiring has been hit badly. Cutting costs is the new mantra: any firm that has to put money on the table is drastically slowing down fresh hiring plans. Sectors in trouble—like aviation, real estate, construction, IT, outsourcing, banking and financial services—have been key drivers of employment in the past. Now, employers are scanning the report cards and doing the productivity sums. Hiring has become need-based. "It sounds like a morgue for some sectors," says Vikram Chhachhi, director at headhunting consultancy Accord Group. "Everybody is groping around, nobody seems to have answers."

Fat increments and bonuses are soon going to be a thing of the past. One recruiter says it will be a wonder if some sectors are even able to match inflation. "We will see more low-cost hires against high-cost ones as companies look at consolidation," says Ganesh Shermon, head of human capital advisory with KPMG. In fact, the possibility of pay cuts now looms large, a sentiment reflected in our poll. While companies aren’t talking layoffs—at least not openly—insecurity is in the air. Soon after Jet Airways’ abortive attempt to fire 1,900 workers came the news that Tata Motors had laid off 700 non-permanent workers in its Jamshedpur plants. "We are not seeing people getting sacked yet. Other early reports do point to it, but not on Naukri yet. Let us wait another three months and see," says Sanjeev Bhikchandani, the CEO of InfoEdge, which runs the popular jobs search website Naukri.com.

Most experts call the current problem a "short-term jobs freeze" but baulk at defining it as the beginning of a retrenchment era in India. That’s not surprising, given Jet Airways’ recent experience with "workforce adjustments". Companies are reluctant to talk, even off-the-record, because they don’t want to do anything that gives off a negative impression in the market. In most Indian companies, observers say, retrenchment is not rampant ("good old Indian values," as one corporate observer puts it). Even in subsidiaries of multinationals, the approach varies: American firms are more likely to give employees money and ask them to leave, but multinationals from Europe are not likely to do that.

"Indian workers enjoy more protection than anywhere else in the world," claims L. Nageshwar Rao, a senior Supreme Court advocate and former additional solicitor-general. The courts are also liberal in giving security for service. So, are Indian jobs on the line? That depends: employees working for troubled US multinationals or sectors that already have an exposure to a hire-and-fire culture (like IT and outsourcing) or those on contract will definitely feel more vulnerable. Of course, there are many ways to make employees feel unwanted. Says Monisha Advani of HR consultancy firm Randstad Holdings, "In good or in tough times, it is important that companies have a consistent policy towards non-performance, to not appear conspicuous when taking such steps (layoffs)."

The heat is on in the banking and financial services sector, where the crisis all began. There’s already talk about consumer finance firms like Cholamandalam DBS Finance, which is learnt ot be planning to restructure its businesses and shut down 75 of its 260 branches. That’s 200-odd jobs on the line. There are also rumours about broking firms, mutual fund companies and foreign banks evaluating human resource needs. But most will just see their pay-packets "rationalised," predicts Rahul Bhasin, managing partner, Barings Private Equity. "Some of them were making too much money, there was no rationale for it," he says.

HR experts are quick to point out that for financial services companies that have just entered the market, this is the perfect time to "scout for good talent" since opportunities are limited and salary expectations are turning reasonable. Reliance Capital’s Sam Ghosh agrees that while there may not be too much active recruitment in the industry, there is definitely need-based hiring taking place. But the general slowdown is taking root. "We’re not building head count because we have no plans to add branches," avers ICICI Prudential Life’s Shikha Sharma.

The downswing is also evident in India’s IT and BPO sectors, which have suddenly switched gears from "fast forward to slow motion". Technology companies have clearly been taken by surprise. Sampath Shetty of consultancy Teamlease Services says: "We assumed that more outsourcing projects would come to India as US companies cut costs. That did not happen. As 60-70 per cent of the projects of Indian IT & outsourcing companies are in the banking and financial services, these projects have gone into a freeze."

So while larger companies are honouring campus commitments, though at a reduced scale, smaller companies are deferring joining dates, while many others are postponing all hiring indefinitely. Foreign companies, which typically came for campus recruitment on "day zero", are also missing in action. Sandeep Chaudhary, business leader (consultancy), Hewitt Associates, adds that in the IT and ITES sectors, jobs at the top management level have totally dried up as organisations are hiring only at the junior level, while middle-level jobs have reduced by 20 per cent.

In terms of sheer numbers, the biggest worry is the health of the real estate sector. The current liquidity crunch is going to put the jobs of at least a million people in the construction and real-estate business in jeopardy over the next six months, avers Niranjan Hiranandani, managing director of Mumbai-based Hiranandani Constructions. Funding for large-scale infrastructure construction projects has completely dried up. Estimates are that more than 50 per cent of the projects will not reach completion. "The actual downfall in this sector has not even begun. Wait for the next 6-9 months. If the US goes into recession, the ripples would be felt in India," says Sunder Lal, senior advisor, real estate, Sahara Group. The impact, even indirect, is huge, because these projects are normally labour-intensive.

Though better off, the buzz around retail isn’t encouraging. Players are loath to admit it, but the market is expecting that most players will either put expansion plans on hold or defer them. It’s well known that the retail gameplan of one of India’s leading business houses has gone awry since February this year. Future Group’s Kishore Biyani, on the other hand, says that till he doesn’t see data to show a drop in domestic consumption, there’s no question of changing expansion plans. He also adds that the next 35-40 days will reveal a clearer picture. "We continue to expand at 50 per cent, so we’re still hiring at the front end. At the same time, we are streamlining processes, so we may not be hiring so much at the middle-management level. Also, at the head office, there is no more hiring because we don’t need more people," he says. Retail is still clearly betting on domestic demand.

What’s worrying is that the list of troubled sectors just goes on increasing: aviation is an obvious one, where jobs will continue to be on the line, but all the new telecom companies are deep in the dumps. The bloodbath could well ring in soon. Adds Ajay Sahai, director general, FIEO, "Fifteen per cent of the units in sectors like textiles, handicrafts, garments, carpets and low-end engineering goods have been hit." These companies had been all along dependent on the US market. Watching the domestic market is essential, says Deep Kalra of Makemytrip, who predicts tough days ahead for the jobs market for at least a couple of years. While CEOs may joke that their "employees will be far more loyal" than before, those with jobs have got far too used to jumping ship at will. No longer.

(Some names have been changed)

By Arindam Mukherjee, Lola Nayar, Pragya Singh in Delhi and Arti Sharma in Mumbai