NEW DELHI/MUMBAI: Layoffs, firings and salary cuts are increasingly becoming all too common across India Inc, highlighting a deepening slowdown in the economy that has forced companies to take the knife to costs to protect their bottom line.
From banking and finance to aviation, from manufacturing to information technology, no sector appears immune, as companies look beyond hiring freezes to job cuts, mirroring a trend across much of the developed world which has seen tens of thousands of people out of employment.
Admittedly India, among the few major global economies that will see respectable GDP growth this year, may not see job losses quite like that being felt in the West, it has nevertheless got policymakers worried.
Prime Minister Manmohan Singh earlier this week urged industry to desist from laying off people and promised to cut interest rates and levies to shore up the economy. The Reserve Bank of India (RBI) has already turned its attention to driving up growth from containing inflation, and cut key reserve ratios for banks and a short-term interest rate, signalling a bias in favour of lower rates.
Yet on Friday, news about job cuts came in from different directions. L&T Infotech, a wholly-owned subsidiary of the country's largest engineering company Larsen & Toubro (L&T), is shedding up to 5% of its workforce of nearly 10,000 employees, according to market sources.
"Rather than give out pink slips, people are being forced to hand in their resignations," said one person familiar with the development. The company declined to comment, but the move has a worrying significance considering that L&T Infotech gets much of its revenues from the manufacturing sector and outside the crisis-hit financial services industry.
The financial sector continued to see more blood-letting, as the blows from the axe wielded in New York and London were felt in India. The Indian arms of Goldman Sachs and Credit Suisse started retrenching employees while Merrill Lynch's operations in the country saw the second wave of firings.
On Thursday, Goldman slashed its workforce by close to a dozen in its Mumbai office, which has close to 100 employees. Goldman Sachs has also lowered headcount at its Bangalore operations by around 30.
There were grim warnings from the country's textile sector, where the industry body, the Confederation of Indian Textile Industry (CITI), said some 7,00,000 people had lost their jobs so far this year, and 5,00,000 more were likely to go in the next 2-3 months.
A majority of layoffs have affected daily-wagers who constitute about 25-30% of a company's workforce. The Indian textile industry employs some 35 million people. "Mills are running for hardly 3-4 days a week, or operating just 75% of their capacities or have reduced shifts from three to one," said CITI secretary general DK Nair.
Overseas, the gloom on the job front continued unabated as fund manager Fidelity Investments became the latest to announce that it was cutting nearly 1,300 jobs and warned of more layoffs early next year in response to declining markets.
Friday's closely-watched jobs data out of the US showed that employers cut payrolls by a much steeper-than-expected 2,40,000 jobs in October, as unemployment rate shot up to its highest in more than 14 years, Reuters reported. The US Labour Department's report showed that last month's job cuts followed a steeply revised cut of 2,84,000 in September, the most severe monthly loss since November 2001, just after that year's September terror attacks, the agency added.
Meanwhile, Indian steelmaker Tata Steel slashed about 400 jobs in the UK and Ireland at its Corus Steel unit, citing poor business conditions as a result of the slowdown in the steel industry. However, Tata Steel has firmly ruled out any job cuts at its Indian operations.
From banking and finance to aviation, from manufacturing to information technology, no sector appears immune, as companies look beyond hiring freezes to job cuts, mirroring a trend across much of the developed world which has seen tens of thousands of people out of employment.
Admittedly India, among the few major global economies that will see respectable GDP growth this year, may not see job losses quite like that being felt in the West, it has nevertheless got policymakers worried.
Prime Minister Manmohan Singh earlier this week urged industry to desist from laying off people and promised to cut interest rates and levies to shore up the economy. The Reserve Bank of India (RBI) has already turned its attention to driving up growth from containing inflation, and cut key reserve ratios for banks and a short-term interest rate, signalling a bias in favour of lower rates.
Yet on Friday, news about job cuts came in from different directions. L&T Infotech, a wholly-owned subsidiary of the country's largest engineering company Larsen & Toubro (L&T), is shedding up to 5% of its workforce of nearly 10,000 employees, according to market sources.
"Rather than give out pink slips, people are being forced to hand in their resignations," said one person familiar with the development. The company declined to comment, but the move has a worrying significance considering that L&T Infotech gets much of its revenues from the manufacturing sector and outside the crisis-hit financial services industry.
The financial sector continued to see more blood-letting, as the blows from the axe wielded in New York and London were felt in India. The Indian arms of Goldman Sachs and Credit Suisse started retrenching employees while Merrill Lynch's operations in the country saw the second wave of firings.
On Thursday, Goldman slashed its workforce by close to a dozen in its Mumbai office, which has close to 100 employees. Goldman Sachs has also lowered headcount at its Bangalore operations by around 30.
There were grim warnings from the country's textile sector, where the industry body, the Confederation of Indian Textile Industry (CITI), said some 7,00,000 people had lost their jobs so far this year, and 5,00,000 more were likely to go in the next 2-3 months.
A majority of layoffs have affected daily-wagers who constitute about 25-30% of a company's workforce. The Indian textile industry employs some 35 million people. "Mills are running for hardly 3-4 days a week, or operating just 75% of their capacities or have reduced shifts from three to one," said CITI secretary general DK Nair.
Overseas, the gloom on the job front continued unabated as fund manager Fidelity Investments became the latest to announce that it was cutting nearly 1,300 jobs and warned of more layoffs early next year in response to declining markets.
Friday's closely-watched jobs data out of the US showed that employers cut payrolls by a much steeper-than-expected 2,40,000 jobs in October, as unemployment rate shot up to its highest in more than 14 years, Reuters reported. The US Labour Department's report showed that last month's job cuts followed a steeply revised cut of 2,84,000 in September, the most severe monthly loss since November 2001, just after that year's September terror attacks, the agency added.
Meanwhile, Indian steelmaker Tata Steel slashed about 400 jobs in the UK and Ireland at its Corus Steel unit, citing poor business conditions as a result of the slowdown in the steel industry. However, Tata Steel has firmly ruled out any job cuts at its Indian operations.
Source: ET
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