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Old 31st January 2008, 17:17   #31
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So.. think before you wish for anything!!
well then i wish to be gifted a safari dicor :-)

back to the topic, the letters to employees mentioned that based on company's performance in jan-march quarter, VAs may go up or down.So , expect further cuts-unlikely that they will increase VA despite profits.

and from next financial year onwards, tax holiday for IT industry will end- imagine what's going to happen then.

Last edited by deetee : 31st January 2008 at 17:24.
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Old 31st January 2008, 17:35   #32
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@samurai

Still don't get it how these IT companies are losing money ?, aren't they losing only their profits ? It's just that they failed to achieve their planned profit after tax, and why should the employees contribute their hard earned money because some stupid strageist in the company did not forecast the downturn and issue a profit warning to the markets ?

and dumb me looking for a job change now
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Old 31st January 2008, 17:41   #33
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Isn't TCS now a publicly traded company? They can't transfer losses across companies like that..
10% of it is public owned.. Rest by Tata sons. Tata Sons in turn has a couple of "charitable" trusts as majority share holders. So nobody knows what happens to the majority of the dividend paid out. One hopes that all of it goes to real "charitable" causes..
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Old 31st January 2008, 18:22   #34
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Still don't get it how these IT companies are losing money ?, aren't they losing only their profits ? It's just that they failed to achieve their planned profit after tax, and why should the employees contribute their hard earned money because some stupid strageist in the company did not forecast the downturn and issue a profit warning to the markets ?
All the fixed costs (salary,rent,maintenance) of the company is planned against the forecasted revenue.

Say the company thinks they will increase their revenue by 100 crores, so they go ahead hire 5000 people and new buildings, computers and infrastructure to handle that extra business. But they only increase it by 50 crores. Now they have to proportionally adjust the cost of paying the new hires. Their usually choices are (1) Dig into their cash reserves (2) Downsize (3) Across the board pay cuts since you can't apply it only to new recruits.

The first choice makes sense only if you know it is a temporary scenario, in the current situation, it can't apply. The second choice is cruel and it affects the company public image pretty badly, especially in India. It might result in hiring problems in future. The leaves them with the third choice...

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Old 31st January 2008, 18:59   #35
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A Their usually choices are (1) Dig into their cash reserves (2) Downsize (3) Across the board pay cuts since you can't apply it only to new recruits.
...
choice 4) save a lot on electircity bills and telephone bills - switching off montiors/pcs when not used for more than 2hrs; cut down personal calls will definitely save something like rs.500-1000 per person.
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Old 31st January 2008, 19:14   #36
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choice 4) save a lot on electircity bills and telephone bills - switching off montiors/pcs when not used for more than 2hrs; cut down personal calls will definitely save something like rs.500-1000 per person.
Big assumption.

The total electricity/telephone/Internet bill in my company is about 10% of the total salary bill. And most people in my company are at very junior level. That means in larger companies (with lots top/senior/middle level) the utility bills will be even lesser percentage of salary bill.

Unless you have seen the company balance sheet, you never know.
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Old 31st January 2008, 19:23   #37
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Even a minor hit on IT salary will trigger slowdown in real estate.It inturn will affect the IT crowd to a major extent.
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Old 31st January 2008, 19:46   #38
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Thats quite a huge amount and doesn't look like a 1.5% cut. I guess the 1.5 % figure is just for media's consumption.

Finnyp, I remember everyone (at least the middle and lower level) getting a salary cut as a reward when TCS reached $1 billion in revenues and announced this to world in a mega press conference. All these announcements are for the media's/shareholders benefit. Anyway, no wonder I left TCS when all this nonsense about EVA started.
you can use that number to calculate his actual salary

kidding apart, it's an average number, CEOs etc may actually get a hike to survive this crisis (oops, that was kidding again). so on average, the sal reduction is less.
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Old 31st January 2008, 19:56   #39
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may be then tcs employees should be given indicas at 1.5% of the Ex-showroom value.
1.5% of Ex-Showroom value? Ie Rs.5450/- for a CAR? I think Tata will reach new standards of the Cheapest car in the world"

For once, im glad Im not in an IT company. We are considering about 13-15% increase in my company this year..cheers:
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Old 31st January 2008, 20:00   #40
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@samurai

Still don't get it how these IT companies are losing money ?, aren't they losing only their profits ? It's just that they failed to achieve their planned profit after tax, and why should the employees contribute their hard earned money because some stupid strageist in the company did not forecast the downturn and issue a profit warning to the markets ?

and dumb me looking for a job change now
to simplify, they may be getting same "revenue", but most of their "costs" are in india (salaries), and because of that, profit (revenue-cost) is reducing. beyond a point, it will start becoming negative, and then they ill need to take steps as samurai mentioned.

I would rather take a 10-20% cut than hear one fine morning that my employer is bankrupt, the company is sold, and all of us are laid off. But that's conservative me (If I was a risk-o-philic, I would be in management by now ).

Another fear I have is most of the growth in india that we see today is driven by incoming dollars (IT+BPO). if dollar crashes, not only IT+BPOs, but auto, transport, food, real estate, and everything else will go down. India is still not a self sufficient economy yet.
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Old 31st January 2008, 20:02   #41
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1.5% of Ex-Showroom value? Ie Rs.5450/- for a CAR? I think Tata will reach new standards of the Cheapest car in the world"

For once, im glad Im not in an IT company. We are considering about 13-15% increase in my company this year..cheers:
before raising that glass of beer, try to see if any of your company's revenue is dependent directly or indirectly by incoming forex.
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Old 31st January 2008, 20:11   #42
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before raising that glass of beer, try to see if any of your company's revenue is dependent directly or indirectly by incoming forex.
Nopes. (20 characters)
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Old 31st January 2008, 20:13   #43
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Another fear I have is most of the growth in india that we see today is driven by incoming dollars (IT+BPO).
I am not really sure about this...
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but auto, transport, food, real estate, and everything else will go down.
You mean the prices of these things? That should be good right... as such most of the middle class who are salried outside IT are finding things tough.
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India is still not a self sufficient economy yet.
Ohh... self sufficient economy was never the aim right from '91. I thought it was an outdated socialist philosophy. Funny, the moment we see a trouble, the mind is trying to find solace in a closed economy.
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Old 31st January 2008, 20:22   #44
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I am not really sure about this... You mean the prices of these things? That should be good right... as such most of the middle class who are salried outside IT are finding things tough. Ohh... self sufficient economy was never the aim right from '91. I thought it was an outdated socialist philosophy. Funny, the moment we see a trouble, the mind is trying to find solace in a closed economy.
I mean because of the spare cash IT guys have, all other industries have kept raising their prices, auto makers have gained so much from them.

people boast of seeing 2-3 times increase in land prices that they own, have they looked at the price increase in alu-pyaaz?

if forex based business are busted, it will be a big mess for sure. why would a company in US hire an offshore employee when it has to pay more than local guys (including infrasructre, travel/visa/HR costs to support them). calculate how many people will be left without the spare cash and what it will do to the prices.

I am not advocating closed economy, all i am saying is that it's very much vulnerable to a single factor, there needs to be some self dependence and diversified risks.
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Old 1st February 2008, 00:05   #45
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Say the company thinks they will increase their revenue by 100 crores, so they go ahead hire 5000 people and new buildings, computers and infrastructure to handle that extra business. But they only increase it by 50 crores. Now they have to proportionally adjust the cost of paying the new hires. Their usually choices are (1) Dig into their cash reserves (2) Downsize (3) Across the board pay cuts since you can't apply it only to new recruits.

The first choice makes sense only if you know it is a temporary scenario, in the current situation, it can't apply. The second choice is cruel and it affects the company public image pretty badly, especially in India. It might result in hiring problems in future. The leaves them with the third choice...

There is an important point that you are missing here. The attrition is 15% or more in most of the big companies. They don't have to downsize, they just have to stop hiring.

This is the problem with the mentality of IT Service companies. IF they get squeezed from somewhere else, they will take the easiest route to recover their losses and usually the easiest route is to squeeze the employees. For example, if there is a Bangalore Bandh or something like that on a Friday, they would make people work on a weekend to compensate.

I would respect a company that downsizes but pays its employees well, than the one which follows the communist approach of everyone share the pain equally. Considering the massive hiring that the big 3 indulge in, they need to control/stop that before taking peanuts from employees.
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