• IT Sector: 25% Job Cut Fear Looms

    IT Sector: 25% Job Cut Fear Looms

    Rahul Srinivas, Oct 31, 2008 1605 hrs IST

    Tough times ahead?

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According to a recent PC World Business Center report, the US economy is heading towards a recession, taking with it - a normally resilient tech sector. Recent financial reports from leading companies paint a gloomy picture and that does give us an inkling of the sordid times that are yet to come. Almost all major players in the tech industry have been hit - and if this phenomenon continues unabated for the next quarter, the US will find itself officially in recession. A major reason for the tech industries' current state of affairs is attributed to the drastic slowdown in consumer spending -- which has hit them badly.

To cite an example, STMicroelectronics, Europe's largest chip maker has reported losses of US$289 million. Compare this with the figures for the previous year where it had made a cool $187 million profit. Sales of memory related products plunged by a staggering 38 percent. At the same time, semi-conductor sales grew only by a marginal 1.6 percent last month.

In this gloomy scenario, the Associated Chambers of Commerce and Industry (Assocham) has a word of caution for us mortals in India. Post Diwali festivities, Assocham thinks that companies from India Inc tech sector are all set to lay-off at-least 25% of its workforce. "Much more serious and alarming situation is emerging post-Diwali, under which corporate India is likely to announce lay-off of nearly 25 percent workforce in next 10 days in seven key industrial segments," says Assocham in a press release.

The report has listed as many as seven sectors, which are likely to be affected worse. These include ITES, steel, cement, financial services, aviation, real estate, and so on. According to Assocham president Sajjan Jindal, the layoffs had started prior to Diwali - but were held back owing to the festive season. Now that the celebrations are over, the corporate restructuring is expected to continue. Jindal says, "The assessment suggests that negative sentiments in the seven sectors could be turned into opportunity, provided the Reserve Bank of India (RBI) discontinues its tight monetary policy and decreases the interest rates by at least three percent."

Cost cutting methods employed by companies include the denial of bonus and incentives, curtailment of benefits for people holding middle and senior management posts. The final nail on the coffin happens to be the lay offs.

Tough times ahead? You bet!

Via: IndiaPRwire


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Discussion Board
(3) Comments
chetan
,Ahmedabad, on Dec 22, 2008 05:18 PM
People always hate to talk about when they are laid off. But as it has become every day's news headline since Yahoo started it with cutting 1500 of its task force last year, now a need of platform has been in demand where people can express their selves in words how they are feeling about their company, whey the got laid off was that justified or not. And every thing they want to tell anonymously.And www.layoffgossip.com is providing you that platform.
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explorer
,Mumbai, on Nov 03, 2008 03:20 PM
this is true
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ajay
,hyderabad, on Nov 02, 2008 07:13 PM
i agree with the tough times but Assocham report is an attempt to blackmail govt reduce interest rates. if inflation spikes further because of very low interest rates then we would see the kind of job cuts we are gonna have. unfortunately in a country like India where poverty levels are high, inflation is also equally important as growth. High inflation is also harmful, would lead to reduction in consumption, demand and then cutting down production followed by job cuts to maintain profits. with commodity boom going down, inflation will fall and interest rates can be reduced.
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