Strong rupee slows down hiring in IT

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Recruiters have confirmed that bench strength in some IT companies has reduced by almost 20-25%. There is lot of focus on 100% utilisation of resources to save cost. More... Strong Re slows down hiring in IT 24 Aug 2007, 0017 hrs IST,Sujata Dutta Sachdeva,TNN Many of them have reported lower margins last quarter, while their costs have moved north. The fallout: Many of them have resorted to cutting costs to save margins. Now, it’s affecting their HR departments as well. Many IT firms have cut down their bench strength, while others are going slow on hiring plans. Some are avoiding lateral hiring, or even if they do, it’s completely need-based — they are keeping it to the minimum. IT recruiters confirm that bench strength in some IT companies has reduced by almost 20-25%. “There is lot of focus on 100% utilisation of resources to save cost. Almost all major IT companies are cutting down bench strength,” confirms Nishu Miglani, general manager, IT, Manpower India. At Cognizant for example, the focus has been on increasing employee utilisation levels by two percentage points, from 61% to 63% in the second quarter of the year. “Every 1% appreciation of the rupee negatively impacts our operating margins by around 20 basis points. The appreciation of the rupee versus the dollar in the second quarter of 2007 impacted our operating margin by around 150 basis points,” informs Bhaskar Das, V-P, human resources, Cognizant. At Infogain Corporation, bench strength has been brought down from 15% to 10%. “Most of our clients are US-based, so we are facing a lot of pressure. We had to take certain steps to save our margins,” says Pankaj Shankar, global HR head, Infogain. What’s more, hiring too has gone down. “While we hired 30-35 people on an average every month, now their numbers have gone down. And it’s project-based.” IT recruitment firms say hiring across the board has gone down by 5% in the last two months. Most of them are now resorting to ‘just in time hiring’. At MphasiS, the focus is on saving margins and pushing up efficiency. As Elango, chief HR Officer at MphasiS, explains: “Earlier, I would be easy about hiring, but now it’s about saving margins. Now we stick more to references, or go back to check those who did not accept our offers earlier.”

[King]

Strange that... we have hired about 15-20 IT professionals in the last couple of weeks or three.

[fineleg]

Every market is going to have its cycle. I think its time for the hiring market to cool down a bit in India.

[Lurker]

Well it is not so much strong rupee as it is weakening of Dollar Ravi. Since bulk of the mullah for Indian IT companies comes from USA their bottomline has been greatly affected. In a strange way it has all been a great leveller. For example in late 90s many companies were riding the boom time simply because of booming Dollar value. In other words if you had a turnover of 10,000 USD in 99 say its value was 450,000. In 2000 it became 480,000 even if your turnover remained 10,000 USD. Today it is just the other way around. Even though the turnover has increased the depreciating dollar value has ensured that the companies that were growing at 40% suddenly have to show its growth at 20%. Still remarkable for most markets but in unforgiving stock world it doesnt count much. No wonder companies are trying to save a buck here and there, pay to lot less workforce and freeze on hiring. But soon as Dollar value goes up it shall come full circle. xxx

[King]

I suppose Indian economy is looking up of late and I have interviewed several blokes in India over the last year or so to recruit. A lot of them are pretty good technically. From my experience the demand has gone up and so has the pay out over the last few years. We used to hire for way less say about 5 years ago. These days they don't come too cheap.

[Guest dada_rocks]

How long would have madness continued things were bound to settle.. What i hate about general tredn in india is the company-hopping.. TCS is finding it hard to net billion+ dollar project of UK firm Prudentisl due to high attrition rate... Peopple change job just for the sake of it.. lakh rs jyada mila kud ke chale gaye nai company mein these kind of things must stop