[Samurai]

Originally Posted by apachelongbow

Greek crisis has or rather will slow down EU. Some portion of work which is EU related, especially long projects may not materialise or may come in smaller quantities.

The impact is indirect. Most of the impetus for the implosion comes from within, the change in how industry works due to the advent in technology. Few months back I had asked one of my team leaders this question:

Me: The CRM project you delivered back in 2008, how long did it take and how many people did it take?
She: It took 5 junior level developers 18 months, or 90 person months.
Me: How long would it take today using modern tools/tech?
She: Two month for one middle level developer, just 2 person months.

That is 2.2% resources requirement compared to the previous decade. That is the impact of technology. This is the reason for the crisis.

Originally Posted by apachelongbow

These chaps have not really picked up domain skills, since their understanding of a domain is from an IT solutions perspective and not from working there for a while. Now as mid managers they have lost touch with technical knowledge too, and will be the first to get fired, if they skill up on technology quickly, they will have breathing space to decide what to do when the bloodletting starts.

You say these chaps have not picked on domain skills, and then say if they skill up on technology quickly, they will get breathing space. How does upskilling on technology help their lack of domain knowledge? Survival of middle level managers entirely depends on domain knowledge.

Originally Posted by apachelongbow

Agile is what companies will be forced to be, especially with pressure from clients and weakening currency worries, and yes they will do with lesser managers in the furture.

Agile... I suspect Agile will actually accelerate the crisis. It is time Agile/Scrum are officially declared as cults.

Originally Posted by apachelongbow

I luckily got the opportunity to pursue my dream, and I am in aviation, currently flying for a major airline in India.

Good for you... nothing better than doing what you love.

Originally Posted by apachelongbow

and it begins now... microsoft retrenching a large number of people mostly in its phone business.
http://www.ndtv.com/world-news/micro...00-jobs-779501

No, this has nothing to do with the looming crisis in IT industry. This is a common outcome of M&A in product companies.

[apachelongbow]

Originally Posted by Samurai

The impact is indirect. Most of the impetus for the implosion comes from within, the change in how industry works due to the advent in technology. Few months back I had asked one of my team leaders this question:

Me: The CRM project you delivered back in 2008, how long did it take and how many people did it take?
She: It took 5 junior level developers 18 months, or 90 person months.
Me: How long would it take today using modern tools/tech?
She: Two month for one middle level developer, just 2 person months.

That is 2.2% resources requirement compared to the previous decade. That is the impact of technology. This is the reason for the crisis.

You say these chaps have not picked on domain skills, and then say if they skill up on technology quickly, they will get breathing space. How does upskilling on technology help their lack of domain knowledge? Survival of middle level managers entirely depends on domain knowledge.

Interesting points you have bought out. Since you seem to be heading a fairly large IT business, I would like you to throw light on something:

What kind of layoffs are we looking at in the near term? Is it going to be severe blood letting, or will it be masked under routine layoffs of 'under performers' every quarter?

Will potentially unwanted employees be given time to be productive, retrain them into useful assets, or will they be left out in the cold?

I believe that salary levels will initially stagnate, there after deteriorate, not even matching inflation levels.

There are lot of middle level managers I know, whose sole job seems to be fixing up/leading meetings to resolve issues between the client, dev team, testing team and quality teams. They are putting in between 10-14 hours each day on this kind of fire fighting, so where does it leave them in learning domain knowledge or even brushing up technical skills? Most of these people started off as technical programmers, and slowly lost their coding skills (not sure if they have picked up requisite domain skills on the way), and now are doing a job which is created by the company.

Its sad to see this hire/fire or rather use and throw policy being practiced by companies, whose sole asset seems to be intellectual capital. When they needed bodies, they hired like mad, now when they don't need so many, they may fire like mad too.
With no security net/infrastructure available in India for jobless people, it seems like bleak days for a mid 30s manager to be fired, then reskill and pick up a equally paying job.

[Samurai]

Originally Posted by apachelongbow

Since you seem to be heading a fairly large IT business

Nope, I head a tiny IT product company. But I worked for TCS for 6 years in the 90s.

Originally Posted by apachelongbow

What kind of layoffs are we looking at in the near term? Is it going to be severe blood letting, or will it be masked under routine layoffs of 'under performers' every quarter?

I am hiring, actually.

Originally Posted by apachelongbow

Will potentially unwanted employees be given time to be productive, retrain them into useful assets, or will they be left out in the cold?

I have nobody like that. Small companies rarely have seniors without extensive domain knowledge. Not only each one my senior staff have extensive domain knowledge, they are hands-on all the way. They can do anything their team members can do, same goes for me. I still design/program critical components of some products in my 25th year.

Originally Posted by apachelongbow

There are lot of middle level managers I know, whose sole job seems to be fixing up/leading meetings to resolve issues between the client, dev team, testing team and quality teams. They are putting in between 10-14 hours each day on this kind of fire fighting, so where does it leave them in learning domain knowledge or even brushing up technical skills?

I come across this kind among my customers who are generally large companies.

Originally Posted by apachelongbow

Its sad to see this hire/fire or rather use and throw policy being practiced by companies, whose sole asset seems to be intellectual capital. When they needed bodies, they hired like mad, now when they don't need so many, they may fire like mad too.

This was discussed few months ago in another thread. I have moved that discussion to this thread starting here as this seems to be the best thread for it.

[Samurai]

I guess most of us are aware of the recent HR fiasco at Tech Mahindra. An employee audio recorded the firing scene and it went viral. At first, I thought they merely botched on the HR process. We know most IT companies have to cut the flab, and such terminations are inevitable. However, when I read the following piece of news, all my sympathies faded.

http://www.thenewsminute.com/article...misation-64870

I believe that when a company is in trouble, the top executives should sacrifice first. Why? Because they get the lion's share of bonus when the company is doing well. But when the company is doing badly, they fire the little guys first? Instead, they should take massive pay cuts to save the little guys. What they did here is unconscionable.

[TorqueyTechie]

Originally Posted by Samurai

I guess most of us are aware of the recent HR fiasco at Tech Mahindra. An employee audio recorded the firing scene and it went viral. At first, I thought they merely botched on the HR process. We know most IT companies have to cut the flab, and such terminations are inevitable. However, when I read the following piece of news, all my sympathies faded.

http://www.thenewsminute.com/article...misation-64870

I believe that when a company is in trouble, the top executives should sacrifice first. Why? Because they get the lion's share of bonus when the company is doing well. But when the company is doing badly, they fire the little guys first? Instead, they should take massive pay cuts to save the little guys. What they did here is unconscionable.

I had read a similar article about the CEO but it was mentioned that the bulk of his earnings was through stock options which he had been given the previous year. He had encashed it this year and hence the high salary. But even than I do agree that it is the responsibility of the higher management to make sure that the actual revenue earning people of the company do not feel orphaned!

[noopster]

CEO compensation is a topic of high emotion and animated debate in the IT industry these days. I agree with Samurai's point about top leaders sacrificing monetary gains for the greater good. At the very least it sends out a very positive message to rank and file. When people are under threat of imminent retrenchment- whether deserved or not- for cost considerations, it seems hypocritical that CXO compensation isn't reviewed at all.

[Samurai]

This recent judgment has made it easy for IT companies in Karnataka to fire their senior staff.

http://new-democrats.com/wipro-benga...-consequences/

[blacksport]

Originally Posted by Samurai

This recent judgment has made it easy for IT companies in Karnataka to fire their senior staff.

http://new-democrats.com/wipro-benga...-consequences/

I started to reading it with much interest until I felt something amiss. I scrolled up only to realize that I was not reading from a news site, but a site for communist propaganda. And calls itself the New Democrats. "Democrats" using the Sickle and Hammer in their logo is hilarious.

Anyway, it is interesting that supervisors are excluded from the Industrial Disputes Act. I do not know the rationals behind that exclusion, but it sounds lame.

I vaguely fit into the definition of a supervisor, and if I am let go, I will leave without a noise.

That's because either I am competent enough to find another job
OR
if I am not competent enough, there is no good reason for the previous company to keep me.

In short I do not think the company has the moral obligation to keep (paying) me after I cease being useful to them.

[R2D2]

Originally Posted by blacksport

In short I do not think the company has the moral obligation to keep (paying) me after I cease being useful to them.

Very true.

If any of us were to start a business of our own (regardless of the sector) we would be asking redundant staff to leave. Businesses are not charities. It is a simple matter of swim or sink for the business and more so for Public Limited Companies whose shareholders demand answers.

Yes, there is a human cost but those in the IT industry and freshers planning to join IT are very aware of the advantages and disadvantages. In short, the higher your salary the higher the risk of getting laid off when things go belly up unless you bring something unique and useful to the table.

Those asking for labour courts to intervene haven't scrutinised their offer and employment letters carefully. In almost all cases IT staff are placed in the management cadre to avoid them being ruled by current labour laws.

And those joining IT Unions are on their way to getting blacklisted, not in the real sense but virtual. These guys need to understand HR teams across companies have strong connections and nobody likes to hire a troublemaker. With reference checks being a given there's not much one can hide if you have left or are leaving for the wrong reasons.

PS - It happens in Govt. Companies too - BSNL likely to lay off 54000 employees

[naveenroy]

Originally Posted by blacksport

I started to reading it with much interest until I felt something amiss. I scrolled up only to realize that I was not reading from a news site, but a site for communist propaganda. And calls itself the New Democrats. "Democrats" using the Sickle and Hammer in their logo is hilarious.

Anyway, it is interesting that supervisors are excluded from the Industrial Disputes Act. I do not know the rationals behind that exclusion, but it sounds lame.

I vaguely fit into the definition of a supervisor, and if I am let go, I will leave without a noise.

That's because either I am competent enough to find another job
OR
if I am not competent enough, there is no good reason for the previous company to keep me.

In short I do not think the company has the moral obligation to keep (paying) me after I cease being useful to them.

Hahah, communist propoganda. To me, the site doesn't look like that. It looks like a site where they are trying to bring about some semblance of workers rights in the IT Industry - something we need very, very badly. As to the hammer and sickle and the word democrat, I think they were just trying to ape some traditional labour unions who are supported these days by wings of some political parties too. Heck, I have seen some labour unions have logos of political parties that are far right. Not sure how a right wing party supports any semblance of workers rights. But that is a topic for another forum - this forum doesn't allow political discussions.

To be honest, I do not understand what you are getting at. No offense. Because you mention that it is lame that supervisors are excluded from the Industrial Disputes Act. But also mention that it is fine if a company just fires you.

For me, that is all the more reason to have more rights for workers in the IT Industry. No?

[Samurai]

Originally Posted by blacksport

I started to reading it with much interest until I felt something amiss. I scrolled up only to realize that I was not reading from a news site, but a site for communist propaganda.

Does it matter? They are reporting on a verdict which Wipro won. Interestingly, none of the newspapers are reporting it. Even Wipro really doesn't want to brag about it, since it is not good for their image.

Originally Posted by blacksport

I vaguely fit into the definition of a supervisor, and if I am let go, I will leave without a noise.

That is because you feel you can find a job easily else where.

Originally Posted by blacksport

In short I do not think the company has the moral obligation to keep (paying) me after I cease being useful to them.

Will you be equally nonchalant if you had no future after getting fired? I know many who have been pushed out in their late 40s and early 50s, and are not able to find any jobs. They don't share your feelings.

Originally Posted by R2D2

If any of us were to start a business of our own (regardless of the sector) we would be asking redundant staff to leave. Businesses are not charities.

I am a business owner, and based on my experience, I feel it is far more complicated.

Originally Posted by R2D2

Yes, there is a human cost but those in the IT industry and freshers planning to join IT are very aware of the advantages and disadvantages. In short, the higher your salary the higher the risk of getting laid off

High risk, high gain. Sure, this is exactly how entrepreneurs think. But IT workers are not entrepreneurs, they are actually very risk averse. They are in a high paying industry, where the demand for labour was always higher than supply. This basically made people feel there was no risk. In fact, most of them ended up thinking they are being underpaid, I wrote a long post about that years ago.

When companies are throwing money at them, nobody pauses and reads the fine-print. During that time, neither party wanted the government to step-in and spoil the party. Companies knew what they were getting from deal, the employees didn't know, didn't care. Now the older employees who partied hard for 20+ years are realizing the cost of partying. But the young ones who are quickly replacing them, they don't know, and don't care. So the vicious cycle will continue.

Old generation companies didn't pledge all their allegiance to shareholders. That was a concept introduced by Milton Friedman, he forever corrupted corporate social responsibility.

Michael E. Porter is considered the ultimate guru in competitive strategy. He wrote a famous HBR article in 2011. It is behind a pay wall, if you have HBR access, do read it.

It starts with these words:

The capitalist system is under siege. In recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems. Companies are widely perceived to be prospering at the expense of the broader community.

I have read the distilled version in another book. He suggests it is time corporations move away from worshiping a single master called shareholder. They should also serve employees, customers, and societies they exist in. This is what companies in pre-Friedman era practiced.

Other than the high pay, IT workers are not so different than factory workers. They are literally at the mercy of the employers. Since the demand was much higher than supply in IT, people ended up thinking that employers are at the mercy of employees. Now 40+ aged employees have discovered the truth, and <35 aged employees are still far from learning the truth. When supply outstrips demand, everyone will learn the truth.

But we can't expect corporate world to change a single thing, they actually love the status quo. And the younger employees couldn't care less.

This is why governments must be proactive in creating regulation to protect the employees, and also employers. And guess what, the first labour law ever created was aimed to protect the employers from high labour cost.

I am not a believer in unions, it is only a band-aid to make up for lack of employee protection under the law. If government has good labour laws, unions are unnecessary.

[V.Narayan]

^^^^^
Samurai, thank you for the article. Very interesting judgment. A judgment, I as an erstwhile employer am relieved to read. In some of the posts above we are mixing unrelated issues -

(1) the right to terminate a supervisory employee;
(2) the fact that any termination causes immense distress to the employee's family and more so in the Indian context -both economically and socially;
(3) the high salaries of some big company CEOs and the humanitarian juxtapose with the same CEO's company axing its employees who earn a fraction.

An employer deals with several economic, market and regulatory pressures that make it necessary for the employer to be able to add and reduce resources deployed in his business - resources such as employees, machinery, facilities, borrowings etc. Without this flexibility no employer would want to invest and create jobs in the first place. It cannot be a one way street for.

In smaller companies (and maybe some larger ones too) often times an individual's personal situation is also looked at when deciding on termination and its mitigation. At the same time, the same employer needs the flexibility to terminate non-performers, trouble makers, dishonest chaps and sometimes, very sadly, when a very large contract gets cancelled. In such a case if I do not have the flexibility to reduce staff, facility and inventory then the employer wouldn't ever bid for a large long term contract and create that extra employment in the first place. In my time I have done all - soft landing for some; recruitment at half-wage; keeping old employees on the rolls when they are terminally ill; summarily sacking bad eggs and walking them out physically etc.

Coming to IT. As an erstwhile customer of high end IT needs my professional experience was that many of our folks (employees and employers) do not develop high end skills or domain expertise and that comes to bite them in their 40s. When we needed some serious IT stuff done for drones we struggled for 18 months with one of the big 3 in India till we finally gave up and set up a team of Americans in USA. Those Americans were all in the 40 to 60 age group and came with deep domain knowledge and got employed and still work there. If you keep doing substantially the same thing for more more and more salary, due to increments, then at 45 you are an out priced person. In my business (aviation) we faced exactly the same problem with pilots and to a lesser degree with maintenance engineers. And given the pressures of competitive bidding a people oriented industry simply cannot survive with over paid employees.

The shock an employee experiences on being suddenly terminated is the same as the shock a mid-tier (ex-) employer like me experienced when I get called in by a big OEM who tells me that the big long term contract I signed 5 years ago and invested big bucks behind now stands cancelled under clause 16 (A) (ii) and would I like some coffee please. And the bank on learning about it promptly starts needling me on the loan they gave. Trust me employees are not the only ones who face harrowing situations not of their own making.

Having said all this I agree that businesses should not and cannot exists only for the shareholders. That is selfish and counter productive given that big businesses along with Governments are the most powerful resource owners in the world. I am on Michael Porters side totally.

[kiku007]

Originally Posted by V.Narayan

^^^^^
If you keep doing substantially the same thing for more more and more salary, due to increments, then at 45 you are an out priced person.

Absolute gold. Well explained.

With respect to the Indian IT outsourcing industry, my humble opinion is that the fundamentals need to move away from low-cost to high-tech. I don't know for how long is the industry going to throw low cost human resources and hope the multinationals keep outsourcing.

[Samurai]

Originally Posted by V.Narayan

Coming to IT. As an erstwhile customer of high end IT needs my professional experience was that many of our folks (employees and employers) do not develop high end skills or domain expertise and that comes to bite them in their 40s. When we needed some serious IT stuff done for drones we struggled for 18 months with one of the big 3 in India till we finally gave up and set up a team of Americans in USA. Those Americans were all in the 40 to 60 age group and came with deep domain knowledge and got employed and still work there.

You hit the nail on the head. You probably have realised that this sad situation is the direct result of high pay. When IT companies pay high, it absolves them from any responsibility to train their employees with long term goals. Instead, they train them for short term goals, to maximise ROI. It is lot cheaper to hire young people and train them in the latest tech, than train their highly paid older employees. It is also cheaper to hire experts for a job, than train current employees, leading to gig economy. Besides, seniors in large IT companies are more trained in management techniques than core technology. The exceptions are very few. This also leads to loss of domain knowledge within the company.

BTW, never engage the big 3 to do complicated stuff. They became big by doing low tech projects in high volume. They take on hi-tech projects at a loss, for showcasing and branding. It is not their core competency, and they will try to learn at your expense.

Originally Posted by V.Narayan

If you keep doing substantially the same thing for more more and more salary, due to increments, then at 45 you are an out priced person. In my business (aviation) we faced exactly the same problem with pilots and to a lesser degree with maintenance engineers. And given the pressures of competitive bidding a people oriented industry simply cannot survive with over paid employees.

This is why I mentioned protection for employers. The 1351AD law was about capping wages. If modern governments impose strict CEO:Median-pay ratio and salary cap, it can instantly control this craziness by correcting the pay across the whole spectrum. Talent poaching will end. Then companies can manage their payroll without having to think about layoffs every time a contract is terminated. They can plan on training their seniors to remain relevant, and also keep their domain knowledge.

Then government can also strengthen the employee protection to balance out the employer protection. You can't have one without the other, balance is important.

Originally Posted by V.Narayan

...same as the shock a mid-tier (ex-) employer like me experienced when I get called in by a big OEM who tells me that the big long term contract I signed 5 years ago and invested big bucks behind now stands cancelled under clause 16 (A) (ii) and would I like some coffee please.

This happens to companies of all sizes. In fact, it has become a very regular event since 2008 crash. There are BHPians who lost their businesses after 2008 due to cancelled contracts.

This is why high pay is like sugar. Employees love high pay when they are young. Only in the 40s they realise sugar is poison.

[V.Narayan]

Originally Posted by kiku007

Absolute gold. Well explained.With respect to the Indian IT outsourcing industry, my humble opinion is that the fundamentals need to move away from low-cost to high-tech. I don't know for how long is the industry going to throw low cost human resources and hope the multinationals keep outsourcing.

kiku007 - glad we agreed on something I believe our IT industry will hit a wall sooner than they expect. In 10 years a lot of the low end programming will likely get taken over by AI inspired programming software.

Originally Posted by Samurai

You hit the nail on the head. You probably have realised that this sad situation is the direct result of high pay. When IT companies pay high, it absolves them from any responsibility to train their employees with long term goals. Instead, they train them for short term goals, to maximise ROI. It is lot cheaper to hire young people and train them in the latest tech, than train their highly paid older employees.

Spending too much on training employees especially in deep knowledge doesn't pay in India because the SC has not allowed the validity of bonds against deep training. In my ex-industry technical training was very expensive - equal to or more than the cost of the employees annual salary. And because of these narrow view laws/court rulings we could not hold them back after just having spent US$20,000 to 50,000 literally on the blighters training and internationally valid certification. We solved the challenge in another way but that discussion is not for here in the public section.

This is why I mentioned protection for employers. The 1351AD law was about capping wages. If modern governments impose strict CEO:Median-pay ratio and salary cap, it can instantly control this craziness by correcting the pay across the whole spectrum. Talent poaching will end.

The Indian Govt tried this in the 1970s and till I think early 1980s where the MD's salary was capped at Rs 7000 a month in rupees of those days. Needless to say they had no way to control the leakage! That used to be a little higher than the salary of a full Secretary in the Govt and it was decreed no one must earn much more than them

However public pressure and social pressure and shareholder pressure on CEO salaries staying within limits (as happens in Europe) is more effective and leaves room for flexibility. In USA Gordon Gecko rules.