India’s leading software services company, TCS, have announced that around 500 employees have been asked to resign due to their poor performance.
With the American economy in deep trouble, Indian IT sector is in trouble. It has been speculated that IT companies have started actually tough regarding employee productivity as a result of the rupee rising against the dollar.
Tata Consultancy Services, which employs over 100,000 workers, has said it would cut 1.5 per cent from employees' salaries in the fourth quarter, as it fell short of certain financial targets following a sharp rise in the value of rupee against dollar and the slowdown in the US economy.
TCS' decision comes on the heels of global IT major IBM getting rid of a large number of its entry-level trainee programmers across major offices in the country on the grounds of performance.
Tuesday, February 5, 2008
TCS asks 500 to resign - More layoffs at TCS shortly
Posted by A C at 7:08 PM
Labels: Dollar-rupee, TCS fires employees, TCS layoff
Subscribe to:
Post Comments (Atom)
11 Comments:
Dude, buddy, sir! Is "More layoffs at TCS" a figment of your imagination, or you have direct access to the CEO's office?
The U.S. dollar is at an all time low. One U.S. dollar today (2/15/08) is worth only 39.62 Rupees. This is causing financial problems for India's IT centers. U.S. companies in the United States needs to be aware of the impact that the falling U.S. dollar is having on foreign markets. Telecommunication and banking companies needs to be especially aware that laying off their company IT workers and transferring the work overseas needs to be put on hold and re-evaluated “Immediately“.
Case and point- At the present value of our falling U.S. dollar, India is struggling to make profits on existing contracts. This means that they are cutting workers and demanding longer working hours with lower wages for the remaining workers. This creates higher risks of losing data and causes longer employee response times.
U.S. Banking and telecommunication companies need to determine what data bases they are willing to take risks with. In other words what data bases (billing data, backup files, alarm center files, account information, etc.) is your company prepared to do without if your data files are lost.
Dear AT&T stockholder,
Your comments originate in half-baked research. Even at 39.62 a dollar (the lowest the rupee dropped was 39.15), the rupee has appreciated by only about 10%. It has affected the bottomline of companies even less.
Around the mid 1990s, when outsourcing seriosuly began, 35 rupees made a dollar.
Indian IT firms, especially larger ones, continue to make robust profits, as is evident in their quarterly and annual results.
Please do your homework well before posting comments on public forums.
To: Samartha
As the U.S dollar continues to fall due to the record U.S. debt growing out of control you had best be aware of what you just posted and the people who may later question your forsight.
Dear AT&T stockholder,
I do not fear scrutiny. I firmly believe in what I said.
As far as I have observed, the dollar has been stable at 39.2+ levels against the rupee for more than a couple of months now.
The major point in your earlier post was that India is struggling to make profits, which is farfetched. Corporate earnings are looking OK here. Yes, there is a slight decline due to the dollar, but still established companies here are cornering 20%+ in margins.
BANKRUPT USA AND STUPID ASIAN CENTRAL BANKS
(PATIENTLY READ THESE THREE PARAGRAPHS FIRST)
Joe Smith of USA started the day early having set his alarm clock (MADE IN JAPAN) for 6 a.m. While his coffeepot (MADE IN CHINA) was perking, he shaved with his electric razor (MADE IN HONG KONG). He put on a dress shirt (MADE IN SRI LANKA), designer jeans (MADE IN SINGAPORE) and tennis shoes (MADE IN KOREA).
After cooking his breakfast in his new electric skillet (MADE IN INDIA) he sat down with his calculator (MADE IN MEXICO) to see how much he could spend today. After setting his watch (MADE IN TAIWAN) to the radio (MADE IN INDIA) he got in his car (MADE IN GERMANY) and continued his search for a good paying AMERICAN JOB.
At the end of yet another discouraging and fruitless day, Joe decided to relax for a while. He put on his sandals (MADE IN BRAZIL) poured himself a glass of wine (MADE IN FRANCE) and turned on his TV (MADE IN INDONESIA), and then wondered why he can't find a good paying job in.....AMERICA.....
SUMMARY
USA does not produce any real goods. They import every thing from Asian countries just by printing dollars or tbills which is effectively a promissory note that at some point in the future they will pay us that value of money back by exporting goods to us and buy back those dollars. The accrued debts of USA as of Feb. 08 are nearing 10 trillion dollars (i.e. 10,000,000,000,000 dollars). There is no way USA can produce so much of goods to pay off those debts. Yet our insane policy makers keep loaning to USA.
Majority of Exports and imports of all world countries are transacted in American dollars. If a country’s exports are more than imports then that country will have a trade surplus and naturally the currency of the trade surplus country will appreciate against the dollar. (Eg. If we require 100 dollars to pay for our imports and we have 200 dollars from exports, then the situation of the exporters who would like to exchange dollars for rupees will be “dollar vangaliyo dollar” Narpathu roobai dollar muppathu roobaikku and so on). This is basic economics as the supply goes up demand goes down. When demand goes down price automatically goes down.
Come to the case of USA. As everybody knows USA has been importing more than what they were exporting, for decades together. Then how come their currency is having more value than our Asian currencies or simply put how is the US dollar defying the law of gravity. What is going on in the world markets? We shall see how India alike other Asian countries is contributing in keeping the dollar value up.
Let us take the case of 2007 where we had dollar surplus despite our trade deficit due to NRI contributions and FDI inflows. The excess inflow of dollars being around 120 billion of which RBI bought up around 100 billion dollars and added to our forex reserve thereby preventing wild devaluation of dollar.
From where did the money come to our RBI to purchase those dollars?
Never in the history of India did we have a surplus budget (Our central governments expenditures always exceeded the revenues collected by ways of taxes). We are already struggling to meet the huge funds required to improve our much needed infrastructure. Then from where did RBI get those rupees to buy the excess dollars the exporters are bringing in. Simple. We have a technology called printing press at Nasik. Upon instructions from our Govt it can print as many rupees as the RBI wants.
The printing presses start creating the rupees required to buy those excess dollars from the market at the expense of paper and ink only. This is called M3 supply. (M3 supply = govt approved and printed kalla nottu). Now the RBI buys those excess dollars in the market with the newly printed rupees. Then it loans those dollars back to USA by purchasing treasury bills (similar to a fixed deposit) of USA so that America can spend that money again.
In one way our govt is right in doing it because if it doesn’t do this then our stupid Asian competitors whose central banks are also doing the same idiotic thing will become more competitive than us and since dollar is the widely accepted currency for trade with other countries as well, all our exports will be in jeopardy. Our domestic manufacturing industries will not be able to compete with cheap imports.
So easy? and after all a good cause. Then why don’t they keep on doing it forever. How silly they allowed the rupee to appreciate by 15 percent last year. The real reason why they could not keep on doing this forever is INFLATION
Imagine a scenario where all companies in India stop producing real goods and start doing software jobs to USA and rest of the world and let us assume that all companies run successfully.
Then in order to keep the value of dollar up our stupid reserve bank must keep on purchasing those incoming dollars by printing money out of thin air as if there is no tomorrow and truck loads of newly printed money ( Govt approved kalla nottu) will be chasing the very few goods produced. The end result being hyperinflation. The proof of this is soaring prices in real estate markets, gold, crude oil etc etc.
USA is borrowing and enjoying, all those goods we Asians toil and produce, due to the stupidity of our Asian central banks in maintaining such a huge exchange rate differential. In USA average salary in software industry is 6000 dollars. At today’s exchange rate it is equivalent to 2.5 lakhs rupees per month. With those 6000 dollars he can enjoy 2.5 lakhs rupees worth of Asian products and have a very high standard of living. The American govt will print dollars and give it to us for all the imported items he bought in the market which means that some day we can also purchase goods from USA with those dollars. But what real goods do they produce? Nothing because they have off shored almost their entire manufacturing capacity to china, India and all Asian countries. Tomorrow if all Asian countries try to buy some real goods from USA with those dollars they will come to know how big a cheat and bankrupt USA is. Russia is cleverly buying gold from USA by using dollars that is why price of gold is soaring from 250 dollars to 925 dollars within a year.
Our Indian software industry is also making abuse of this exchange rate differential. They say in America you pay 2.5 lakhs per month for a techie okay we will do it for one lakh. You have a cost saving of 60 percent and they pretend that they are very fair even though they are aware that the exchange rate differential maintained due to the M3 money supply will create disparity in the Indian working class.
Now they have one lakh in revenue for a person of which they don’t mind giving 50k or 60k as salary. They attract best engineers to do the very basic testing and coding works which they could have very well done with science graduates for a meager 5k to 10k per month. They are not bothered about distorting the balance for the rest of the Asian manufacturing industries who are unable to pay such hectic salaries. The top management of every software company is aware of the exchange rate differentials. They simply don’t bother because RBI is always there to print rupees and exchange for dollars. Further if techies salaries go down then the top management Walla’s salaries must also go down. This is not acceptable to them. They create an illusion that testing and coding are so brain storming and there is a talent crunch in India. They covertly encourage attrition by not even insisting on relieving letters which is a violation of basic ethics and justify wage hikes.
The disparity in salaries these govt approved and printed kalla nottus (rupees handed over to software companies for exchange of dollars) have created is so huge that a bank manager with around 20 years of experience and working 12 hrs a day for 6 days a week and terrible responsibility draws only 60 percent of the salary a tester (leave the programmer) with two years experience and probably spending half of the time in bench draws.
Now it is high time realism is starting to kick in. Gone are those days of illusion that testing, coding are super brainee jobs. They are very similar to assembly line jobs in a factory and don’t deserve such hectic pay. News of software companies hiring science graduates are popping up in every nook and corner. Hope you remember software and other exporters screaming for RBI to intervene when rupee appreciated 15 percent last year. This is because their kalla nottus were creating huge inflation and the RBI decided to stop exchanging govt approved and printed kalla nottus to dollars for a while and the inflation promptly came down from 6.5 percent to less than 3 percent.
At some point in the future if the Asian central banks realize inflation is getting out of control due to their stupid practice and stop buying dollars thereby allowing their currencies to appreciate then all bets are off. Lots of salary cuts and termination news, just like what Tcs and IBM did in the end of Jan 08, will start popping up.
The economy of USA is in no good shape either. Just to keep their economy afloat or worse just to pay the interest of their debts they need to borrow around three billion dollars every day from the rest of the world. Day by day bad news is pouring in. There is no field without a mention of huge layoffs in USA from the beginning of 2008. Being an economy where two third of GDP is consumer spending, if unemployment goes up then consumption goes down in turn collapsing the businesses and their offshorings.
Take the case of a boxer who is infected by HIV. Every thing looks great with him. You cannot know that he is affected by a killer disease unless and until symptoms of the disease starts showing up.
USA is very similar to the HIV infected boxer and now for the symptoms part of goliath’s (USA economy) death.
1) World Bank and IMF have already warned that dollar might collapse any day due to their unsustainable debt.
2) Subprime related problems are hitting the headlines.
3) All banks in USA are writing down (Decent American version of saying “lost the money”) billions and billions of dollars.
4)World’s largest bond insurers Ambac and Mbia are already downgraded from AAA to AA Grade which will in turn erode away huge part of capital from the world’s largest American banks pushing the largest consumer economy (As Americans themselves feel proud to admit) into far far worser situation than a mild recession which is called depression.
Even if America somehow manages to keep delaying the entry into the inevitable depression from mid 2008 to 2025 or still further, there is still terrorizing news.
Due to the huge risk involved in the erosion of the value of their forex reserves every nation wants to get rid of the devaluing dollar. The only thing preventing them from doing it is the fear of the central bankers that like stock market crash if any one Asian central banker suddenly tries to sell off their dollar holdings, then everybody will panic and try to dispose off their dollar holdings and the depreciation of the dollar would be so fast that within one electronic trading hour the value of the dollar might change like this
Prior to Dollar sell off 1 dollar = 40 Rs
After Dollar sell off 1 Rs = 4000 dollars.
(This is no exaggeration. I would like to challenge any sane person to prove me wrong).
For a country like India it would mean that all those two hundred billions (20,000 crores) of dollars or so bought by our RBI as forex reserve would become worthless within a matter of minutes. Similar is the case for Chinese (1,40,000 crore dollars), Japanese (1,00,000 crore dollars), Gulf countries (3,50,000 crore dollars) and all other Asian central bankers.
Yes of course nobody wants the value of their dollar holdings to go down. No sane person will try to sell off their dollar holdings suddenly. But the situation is alarming. Every Asian central banker is watching his counterpart with nervousness if whether he would start the sell off. Nobody wants to start this but once started nobody wants to be the last in getting out of dollars for the more later they get out the more worthless their dollar holdings becomes. This is what our reserve bank governor, Indian finance minister and prime minister mean when they say that global uncertainties are looming.
So techies who dream of 17 percent wage hike every year till we match American wages, please be aware of the reality and be prepared for the changes that might suddenly turn up. Bear in mind that your profession might be very similar to a cinema heroine’s career. However beautiful she maybe, the most talented actress, okay. Few years down the line when new beauties turn up the tendency would be to avoid the old heroine.
Similarly when new talents are available in the due course of time and rupee appreciates further the company may treat you like a liability or replace you with a cheap fresher. The recent news of TCS planning to debut freshers onsite is a classic example of what is in stake for the future. Don’t get carried away by current illusions. Start saving now and avoid getting into huge EMI loans. If you are a male get married soon because right now girls both from your field and other fields prefer you only. They are not aware of the risks involved. This situation may not last long. When USA goes down you will end up jobless and will become the least preferred. Act fast.
Especially brides who will not even consider grooms from other fields
Idhae linelayae mapillai parungappa,
Padhinanjayiram sambalathai vaichukkittu enna perusa sadhichuda mudiyum,
Akka veetukarar softwarela ambathayiram vangurar enakku pathayirathula mapillai partha naalaiku Yivarum avarum onna parkum pothu Yivar manasu evvalavu sangadapadum
And all those dubakkurs
If you are still going to be adamant “MAY GOD BLESS YOU”.
STILL NOT CONVINCED? OR YOU ARE IN ONE OF THE FOLLOWING CONCLUSIONS.
1) SOME NON IT JEALOUS FELLOW BLABBERING?
2) USA IS A SUPER POWER. ALL COUNTRIES ARE DECADES BEHIND THEM. THERE IS NO CHANCE OF USA FAILING.
3) I HAVE BEEN TO USA. IT IS THE RICHEST COUNTRY IN THE WORLD. I WILL NEVER BELIEVE THIS ARTICLE.
4) EVEN YESTERDAY I SPOKE TO MY BROTHER IN CHICAGO. HE SAID ALL THESE THINGS ARE RUBBISH AND JUST FEAR MONGERING.
Ha ha ha
REMEMBER LAST YEAR WHEN RUPEE APPRECIATED BY 15 PERCENT THE EXCESS INFLOW WHICH THE RBI DID NOT BUY WAS ONLY AROUND 20 BILLION (2000 CRORE) DOLLARS AND AMERICA HAS A BUDGET AND TRADE DEFICIT OF 1500 BILLIONS EVERY YEAR WHICH MEANS LOTS AND LOTS OF DOLLARS WILL BE POURING INTO ASIA.
NOW ENJOY THESE TWO LINKS AND FEEL THE CHILL SHOCK WAVES FLOWING DOWN YOUR SPINE.
http://www.youtube.com/watch?v=3RhnHo3RDfg
h
ttp://www.youtube.com/watch?v=jmeHiFZUWtE
Place the cursor over the links below and then
Press ctrl +click to view the links.
A new pop up window will open. If your broadband is slow pause the video for a while till it gets loaded and then press play to watch the video. (Or) just copy and paste these web addresses in your internet explorer web address bar.
SPM,
Your post made for an excellent read. Your exposure to the principles of economics seems to be profound.
Since I am not a Nobel-class economist, or even a student of any merit, let me ask some layman questions.
"So techies who dream of 17 percent wage hike every year till we match American wages, please be aware of the reality and be prepared for the changes that might suddenly turn up. Bear in mind that your profession might be very similar to a cinema heroine’s career."
What career doesn't have inherent risks? OK, so poor techies heed your advice and think of getting into a new field, where does they move? Banking, real estate, retail? Will they survive if the IT 'bubble' goes boom? I see so many people making huge investments around the belief that IT in India will be alive and well for a few more years. If things turned out unexpectedly, would't that capsize Indian economy as a whole? The 'consumer' in Indian economy is largely from IT and allied sectors. It may be possible to move to the old consumption
Probably, one could get into the government paying a few million as bribes. That seems to be 'the' thing to do at the moment. I wouldn't go with that option though--my personal choice.
You say a government bank manager with 20 years of experience earns as much as a coder with 2 years of experience. What about the job security the former enjoys? And the connections? And the 'top up' income? The pay that IT professionals enjoy should take into account all these factors. Anyway, the proposed sixth pay commission aims to bring down this disparity even in hard currency form.
You shared a YouTube video discussing the depreciation of the dollar over the past century or so. So, what has happened to the rupee? I heard a family could survive in Rs 20 in 1920. Now? There was a time when 8 rupees equalled a dollar, but 'that rupee' could buy a lot. Now?
I agree that IT professionals will need to add "real value" rather than doing basic chores for firms in America. A shift to that model has already begun in many companies. I also agree that we will need to assess the correct pay for the value we bring to the table.
But beyond that, I have my doubts.
Errata:
Read para 4 -- "It may NOT be possible to move to the old models of consumption."
Again para 4 -- "Where DO they move?"
Dear samartha,
I believe you are a tech guy. Please forgive me if you have found some insulting words. I have only tried to create awareness in the tech sector. I do not wish them to lose jobs. It is just like a weather forecast.If you know in advance that there is a storm ahead then you can plan for contingency. I was so cruelly insulted while seeking bride for my sister's son so many times on ground that he is from non IT and he only draws around 1.5 lakhs per annum. We are from agricultural background and that fellow has property worth 4 crores. Yet i heard so many times the words that i have written in the article from the brides themselves.This attitude has to change.Grooms from non IT should not be treated like third grade people. If you feel that my previous comment was genuine pass it on to all your friends and try to create awreness or alternatively refer them to www.chandru541969.blogspot.com
Dear samartha
chandru and spm are the same person. I would like to congratulate you on your bravery to study the entire article i wrote. Really nobody wants to read an article which they dont like to hear. But complacency is a silent killer.People should know the dangers involved when they are overpaid. You had the guts to know and i know you will be well prepared when the dollar crash happens by mid 2009.
1.)Regarding 'poor techies heed your advice and think of getting into a new field, where does they move? Banking, real estate, retail? Will they survive if the IT 'bubble' goes boom? I see so many people making huge investments around the belief that IT in India will be alive and well for a few more years. If things turned out unexpectedly, would't that capsize Indian economy as a whole?'.
1.Our GDP will shrink from 8.5 percent growth to 5 or 6 percent for an year or two.Our economy will not capsize.
2.Our govt has tasted the good and bad effects of M3 money supply.After the dollar crash they will utilise that M3 money technique to improve our infrastructure.
3.All those techies who might lose their jobs gradually (sure it will not happen overnight)will frown for sometime and then start accepting reality and join their respective fields with realistic salaries and the most important thing is they will contribute something to mother india instead of serving americans and bringing worthless pieces of paper (dollars) into india.
2.)Regarding 'So, what has happened to the rupee? I heard a family could survive in Rs 20 in 1920. Now? There was a time when 8 rupees equalled a dollar, but 'that rupee' could buy a lot. Now?'
1. This was what i was speaking about in the article.hyperinflation
Good to hear from you. I am a tech guy, but I have always thought about the value I bring to the table twice before accepting any offers. Incidentally, I have also thought about some alternative careers just in case. :-)
I appreciate your responses--both current and the last one, and agree with many points. You put forward your thoughts cogently.
Let's keep our fingers crossed and see what the future brings. One will have to deal with it anyway.
And yes, you are completely right that people should not be judged on the basis of their inflated salaries. Human dignity is way bigger than money.
Post a Comment