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Old 17th March 2023, 09:00   #1006
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Re: Jobs, Attrition & Layoffs in IT companies

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Originally Posted by theabstractmind View Post
The bank is operating again and many depositors have returned. The FDIC doesn't need to pay from its pocket largely. It is making efforts to recapitalize the bank via normal operations. This is all I can say - as such information is publicly issued by FDIC.
That’s good to hear but all I am asking is where is the money coming from? All this money which the FDIC is providing for has to be accounted for somewhere and as per their own financial admission they only have 1.26% in reserve out of all the amount insured by them for all banks put together. So, it just looks like the FED will print some more $ at the backend which will be nothing but further QE and will ensure inflation remains high in the long term.

Back in 2008 the govt said they will never bailout banks again but look at where we are again none of the big bankers have been arrested for their wrongdoings just like back in 2008.

The FDIC is currently looking for a buyer for SVB and has already tried twice and doesn’t want to end up like the UK operation which was bought by HSBC excluding assets and liabilities of SVB, UK.

Jobs, Attrition & Layoffs in IT companies-40ab7515fe64475b91bdbcb6d39c633e.jpeg
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Old 17th March 2023, 09:18   #1007
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Re: Jobs, Attrition & Layoffs in IT companies

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Thatís good to hear but all I am asking is where is the money coming from? [/ATTACH]
When you buy a car without loan? Where does the money come from. A suitcase full of 20 lakhs? Not usually. Its just a piece of paper with something written on it. Its called a demand draft or cashiers check.

Now the dealer can take that check and get cash. But no, they will just go ahead and put that in their bank account and it will increase the number.


Same thing here. FDIC will give a piece of paper saying, here is your 10 million dollars. In theory all the people can decide

I do not want this piece of paper. I want my mattress and i will put this 10 million dollars in the mattress. But a very small percentage will do that. So in the end, its a credit note, and their money is safe.


The total amount of money in circulation is far less than the total value of deposits in all the banks.
The reason FDIC always ensures everybody gets their money, is because if people don't then you need your mattress, and there is not enough printed money to go around to fill everybodies mattress
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Old 17th March 2023, 10:51   #1008
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Re: Jobs, Attrition & Layoffs in IT companies

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Originally Posted by speedmiester View Post
India is growing and will continue to grow. Our major challenge is that most of our startups/industry are service oriented, this needs to change. We need to focus on building world class products, this is essential to ensure a robust growth and to become market leader.
Our major challenge is that we (especially in B2B) continue to undervalue the quality of product. Also, since cost of labor is quite low, any issues in the kludge which is deployed could be resolved easily with only a small additional expenditure. Perhaps both these points are interlinked since a higher quality product result in lower TCO (but this is applicable when there is a significant cost one must bear to repair/rectify).

You must be aware of L1 tendering process followed by Govt organizations / PSUs (which cannot be done with due to transparency constraints) but you might be surprised that similar pricing/value play happens in "Lala companies" (the great Indian Private sector). I see such a huge difference between the deal valuations done for same scope of work for a US/EU/ME client vs Indian client.

Last edited by alpha1 : 17th March 2023 at 10:55.
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Old 17th March 2023, 11:39   #1009
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Re: Jobs, Attrition & Layoffs in IT companies

Joseph Gentile - Chief Administrative Officer, SVB.

Third Time Unlucky? This SVB Employee Was Also Part Of Lehman Brothers & Arthur Andersen Collapses

Arthur Andersen were acccountants to Worldcom and Enron.

Last edited by EV NXT : 17th March 2023 at 11:56.
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Old 19th March 2023, 10:46   #1010
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Re: Jobs, Attrition & Layoffs in IT companies

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I have another perspective. These companies make more than $1M -$2M in revenue and a profit of $500k minimum AFTER salaries and expenses PER EMPLOYEE. They hire the best and brightest and though may not ALWAYS have enough work for them. Work comes in cycles.

What's wrong in sharing this wealth with the employees? Any day better than an Indian Lala company. It opens up real chance for people to accumulate unthinkable wealth via legal means and hard work and education!
I'm using member @OffRoadFun as a peg to describe a perspective of the Indian IT industry. My observations below may sound harsh. The post is not directed at @OffRoadFun. I pen this in my capacity as one of the much reviled Indian Lala's referred to in the quoted post above. :-)

First, we should stop referring to IT as Technology. IT is only one branch of Technology. Research fundamental & applied, technology advances often of a far higher order occur in other branches of technology - pharma, surgeries, power generation, bio-technology and what have you. Only they go about their business quietly without constantly being in the news about billionaires and valuations.

Second, in India at least a vast part of our IT industry {if not all of it} is operating in a 50-year bubble of purchasing power parity - buy factors of production i.e., labour, infrastructure etc. in INR and sell your products/services in USD and make profit off the difference caused by purchasing power parity. The super profits the Indian IT industry makes and the higher than market salaries it pays come from this fundamental difference. It creates the illusion amongst the founders of being supermen and amongst the young and naive employee that he/she is somehow special. And I can't blame that 30-year old who suddenly draws 3 lakhs a month or more from feeling that way.

If God forbid the INR were to ever go to Rs 60 to 1 USD all, every paisa, of the profits and above average wages would disappear. The industry itself would be in question. Can this happen? I hope it won't, but it can. In the 1970s when Japan first became the world's third or second largest economy their exchange rate used to be around USD = 400 Yen. Today it is ~130 a 3X appreciation versus the USD in half a century. The USD is IMHO an overvalued currency, the one-eyed king in the land of the blind. As the alpha nation's political & economic heft diminishes compared to rest of the world its capacity to maintain an overvalued prima donna currency declines. Britain experienced that in the early 1920s, the late-1940s, mid-1960s. It could happen to the USD too.

Now this PPP bubble may last another 25 years and that's good for our young IT workers as most would have wrapped up their careers by then.

As far as sharing company earned wealth is concerned in a way it is already being shared with IT employees above a certain grade through stock options and bonuses. Each factor of production receives its own financial reward for what it brings to the table - banks get interest, employees get wages & bonuses, suppliers get payments, large customers get better pricing and risk capital {entrepreneurs/investors} get valuation & dividends. Would we pay our bank a higher interest because we got a bigger bonus in some year? Do we double our maid's salary when we get a big promotion? IT workers already get paid between 20% to 50% above the market compared to other sectors for the same qualifications; they are already getting their share of those extra profits being made only most don't realize it. Regardless of whether a business does well or not each factor of production other than Risk Capital demands that their fair compensation be paid come hell or high water. The returns to the contributor of Risk Capital is the only one which is totally variable and absorbs all the punches of good and bad fortunes from a great profit to a damning loss.

Statements like the one highlighted in bold indicate a fundamental lack of understanding of the foundations that a business gets built on and runs successfully.
If one wants unthinkable first generation wealth then to become an entrepreneur is the route to follow along with the struggles, harassment by powerful customers and Govt officials, risk of bankruptcy, risk of the very house you live in getting repossessed by banks and other such fun things. If we desire unthinkable wealth we first need to understand the risk-reward-effort matrix behind it. We need to understand that the effort of the contributor of risk capital is 10X that of the senior most employee. Only an entrepreneur knows what horse manure tastes like.

Regards,
Indian Lala

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Originally Posted by Samurai View Post
I never said refuse it. But IT folks should not fall into the illusion that you are getting what you truly deserve. Don't start feeling entitled, and then feel bitter when industry dumps you by the side when recession hits.
Thank you for saying it as it is.

Last edited by V.Narayan : 19th March 2023 at 11:16.
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Old 19th March 2023, 11:16   #1011
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Re: Jobs, Attrition & Layoffs in IT companies

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Originally Posted by V.Narayan View Post
If God forbid the INR were to ever go to Rs 60 to 1 USD all, every paisa, of the profits and above average wages would disappear. The industry itself would be in question.
Some of the industry risk would be mitigated when other (non-IT) Indian companies achieve greater scale and become big customers of IT services. For e.g a Reliance becoming a top 5 account of a WITCH company. I am not sure how much of TCS does Tata group's "in-house" work but I think it would be considerable. Of course, margins of ~25% from Indian IT projects can never be realised.

The IT product (non-MAANG) MNC company that I work in, considers India as the 2nd biggest growth market next only to the US.

Last edited by DigitalOne : 19th March 2023 at 11:30.
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Old 19th March 2023, 12:11   #1012
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Re: Jobs, Attrition & Layoffs in IT companies

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Originally Posted by V.Narayan View Post
I'm using member @OffRoadFun as a peg to describe a perspective of the Indian IT industry. My observations below may sound harsh. The post is not directed at @OffRoadFun. I pen this in my capacity as one of the much reviled Indian Lala's referred to in the quoted post above. :-)

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Originally Posted by V.Narayan View Post
First, we should stop referring to IT as Technology. IT is only one branch of Technology. Research fundamental & applied, technology advances often of a far higher order occur in other branches of technology - pharma, surgeries, power generation, bio-technology and what have you. Only they go about their business quietly without constantly being in the news about billionaires and valuations.
I am not sure of relevance of this in context of what I said. What IT means is a topic for another discussion.


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Originally Posted by V.Narayan View Post
Second, in India at least a vast part of our IT industry {if not all of it} is operating in a 50-year bubble of purchasing power parity It creates the illusion amongst the founders of being supermen and amongst the young and naive employee that he/she is somehow special.

Now this PPP bubble may last another 25 years and that's good for our young IT workers as most would have wrapped up their careers by then.
50 year bubble? A new gen will say bring it on! If a business model as visibility of 50+25 years as mentioned, there is nothing to worry about. Conservative old school people may think of what happens after 30 years, positive people will ride the wave and think of diversification beyond that. If one does not have flexibility to change, he/she is doomed anyways. BTW, I have been hearing of this PPP bubble bursting for last 15 years and it has grown only bigger as a Lala would say.


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Originally Posted by V.Narayan View Post
If one wants unthinkable first generation wealth then to become an entrepreneur is the route to follow along with the struggles, harassment by powerful customers and Govt officials, risk of bankruptcy, risk of the very house you live in getting repossessed by banks and other such fun things. If we desire unthinkable wealth we first need to understand the risk-reward-effort matrix behind it.
Completely disagree. There are many viable, healthy, positive ways to make unthinkable wealth even in India today with or without being entrepreneur. And that's what I mentioned in my original post. Google's Eric Schmidt is richest non-founder billionaire at $25bn. And I am not even counting several multi millionaires ordinary employees, not just above a certain level as in Lala companies.Sitting in India, closer home, some of these ordinary employees are minting crores. The profit margins of Lala companies are not that low. Have they shared those with employees to give a chance for retention? No. The premise of Lala companies is non-sharing of profits, distrust of employees and hence the poor treatment of employees and greed.

I know some who have done good in Lala companies for sure. They look 10 year older than they are and still nowhere close to their counterparts in non-Lala companies.


Lastly, admitting one has Lala thinking is bold and I have not seen many with Lala thinking to have courage or realization to admit they have Lala mentality.

Last edited by OffRoadFun : 19th March 2023 at 12:19.
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Old 19th March 2023, 15:38   #1013
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Re: Jobs, Attrition & Layoffs in IT companies

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Statements like the one highlighted in bold indicate a fundamental lack of understanding of the foundations that a business gets built on and runs successfully.
I think youíve outlined the right approach below. I tend to agree with that view.

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On this thread I hesitate to write, even though I represent the employer here because I see no inclination in most {there are exceptions} to understand the underlying causes that led to the unnatural exuberance of 6 to 12 months ago and the similarly unnatural ranting going on right now.

Last edited by EV NXT : 19th March 2023 at 15:57.
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Old 20th March 2023, 06:00   #1014
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Re: Jobs, Attrition & Layoffs in IT companies

Usually, I stay away from social media back and forth conversations but will change my habit for once in this case.
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Originally Posted by OffRoadFun View Post
50 year bubble? A new gen will say bring it on! If a business model as visibility of 50+25 years as mentioned, there is nothing to worry about.
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Originally Posted by OffRoadFun View Post
BTW, I have been hearing of this PPP bubble bursting for last 15 years and it has grown only bigger as a Lala would say.
All,

Purchasing power parity & the associated currency risk is watched carefully by the Risk Committees of the Boards of the big IT companies many of our members work for and it is the one item we have no answer to. The general assessment of Risk Committees of these Boards is that if events, trends and surprises {e.g. Ukraine} over the next several years are inimical to USA and to the US$ as the world’s reserve currency then we probably have 15 years at best. If the other way around may be 25 years.

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Conservative old school people may think of what happens after 30 years, positive people will ride the wave and think of diversification beyond that.
Dear @OffRoadFun,

Not intending to be sarcastic or pungent but seriously once you have built a real business of at least a modest size, let's say 1000 employees/Rs 1000 crores top line, and dealt in the real world with your neck on the line with diversification, right sizing, “ridden the wave”, and succeeded by not thinking well ahead then we can have a conversation. Do share the waves you may have ridden. I never rode any waves though like many I got drowned in two of them. Till then this MBA jargon is way above my paygrade earned in the school of hard knocks. Surprisingly, I did my MBA once upon a time and survived and thrived despite that :-)

One can’t, simply can’t, build a real business, I mean those outdated ones that turned real cash profits, without thinking long ahead, be it 5 years or 15, without being wired into global trends and without being completely taped into the industries and trends of your big customers. Maybe your experience has been different and you could share it for the benefit of us all.
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The profit margins of Lala companies are not that low. Have they shared those with employees to give a chance for retention? No. The premise of Lala companies is non-sharing of profits, distrust of employees and hence the poor treatment of employees and greed.
Ahh!! The law of prejudiced generalizations. Have folks ever wondered why attrition rates are often, not always but often, so much lower in owner managed companies? - referring to all industries here and not just IT. Infact till well around 40 years of age I had never even heard the term attrition. That jargon was introduced by the IT industry in the 1990s where HR managers, themselves looking for a change try to manage employee attrition! I can explain why our attrition was rarely over 5% per annum but alas I am merely an old conservative business wallah.

I'm all for giving fair and generous performance bonuses to employees & teams. In case of division heads it would be some variant of the business divisions financial metrics - top line, contribution margin, days receivables, working capital efficiency etc. But I cannot understand why profit sharing comes into the picture. That is like saying if we make a great profit we must pay 20% extra to our raw material suppliers and share that profit. I think you fundamentally do not understand that each factor of production - risk capital, labour, debt capital, infrastructure has a defined financial reward and crossing those lines creates the mayhem we see in Byju's, Oyo Rooms and others.

But yes if you are backed by an overwhelming dose of private equity capital whose sole interest is valuations and gross market value then yes for a few short years you can burn capital without planning, create mayhem, believe you are above the law, start drinking your own PR kool aid, become a celebrity etc and pretend you are riding the wave.
Quote:
I know some who have done good in Lala companies for sure. They look 10 year older than they are and still nowhere close to their counterparts in non-Lala companies.
Thank you for confirming your prejudices.:-) It is a common human tendency to take our very limited personal observations and apply them as a universal truth.

Last edited by V.Narayan : 20th March 2023 at 06:16.
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Old 20th March 2023, 10:44   #1015
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Re: Jobs, Attrition & Layoffs in IT companies

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Originally Posted by V.Narayan View Post
Usually, I stay away from social media back and forth conversations but will change my habit for once in this case.


Dear @OffRoadFun,

Not intending to be sarcastic or pungent but seriously once you have built a real business of at least a modest size, let's say 1000 employees/Rs 1000 crores top line, and dealt in the real world with your neck on the line with diversification, right sizing, “ridden the wave”, and succeeded by not thinking well ahead then we can have a conversation. Do share the waves you may have ridden. I never rode any waves though like many I got drowned in two of them. Till then this MBA jargon is way above my paygrade earned in the school of hard knocks. Surprisingly, I did my MBA once upon a time and survived and thrived despite that :-)
How do we land up here? Why is it relevant whether I have 1000Cr business built or not?

What I said contrary to what many think IT workers are feeling entitled, it is a good thing to get paid huge amounts since their employers make $500k on each of them, unlike Lala companies which don't.

Some self proclaimed Lalas lecture on business model of IT companies etc. or longevity of it, which is not even the point. But even for a minute if assume the doomsday scenario, if Rupee goes up, there will be pay revision/layoff in India because the cost will go up. Let it be because that's what (cost arbitrage in labor) businesses are built upon. Layoffs/attrition are part of any modern business (especially service oriented) and whoever thinks otherwise is living in dreamland. Till then enjoy the party and stay close to the doors if you feel party is about to get over (which I don't think anytime soon BTW).

And don't let this talk of layoffs/attrition (or the doomsday scenario of 1 USD = Rs 60) mask the fact that Lala companies are mean when it comes to sharing wealth, Lala companies are mean.

Feel VCs are throwing money, founders splurging? It's VCs problem! There is no free lunch and VCs are no saints and they know it!

Last edited by OffRoadFun : 20th March 2023 at 10:51.
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Old 20th March 2023, 12:11   #1016
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Re: Jobs, Attrition & Layoffs in IT companies

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How do we land up here? Why is it relevant whether I have 1000Cr business built or not?
https://en.wikipedia.org/wiki/Argument_from_authority


But, I think this Lala vs non-Lala debate is pretty unnecessary. No points for guessing where people flock to irrespective of all the attrition. Yet the Lala companies are the ones who create the most of the jobs. They both have their place in the economy.

Last edited by dragonfire : 20th March 2023 at 12:13.
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Old 20th March 2023, 12:36   #1017
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Re: Jobs, Attrition & Layoffs in IT companies

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Originally Posted by dragonfire View Post
https://en.wikipedia.org/wiki/Argument_from_authority


But, I think this Lala vs non-Lala debate is pretty unnecessary. No points for guessing where people flock to irrespective of all the attrition. Yet the Lala companies are the ones who create the most of the jobs. They both have their place in the economy.
I mean no offense to any one working in so-called "Lala" companies. I have had experience myself working closely with them. Can/should they be disappear? Unfortunately NO, as mentioned. But that will not make generous.

Worked with employees in ODC once in BLR of one such companies (Starts with W, ends in O). Employees were crammed, no space of one person to pass between row of employees. Few employees were having carpel tunnel/back pain due to poorly designed ergonomics. Saw some employees using toilet paper in bathrooms to dry hands as half the air dryers were not working and there was a long queue to dry hands anytime of the day, all in name of environmentally conscious company (no paper towels of course) a ruse invented by someone in facilities department to reduce costs. Microwaves were not installed in ODC as it was against the policy of the company as it can attract rats. Some of them did complain to management about ergonomics and the standard answer of a middle aged manager was company has to fit-in certain number of people per sqft as business goal and nothing can be done. My colleague from the US upon his first visit mentioned it looks like a sweatshop to me.

This is what Lala mentality does to employees, it's not a joke. And the company has north of 50% of margins and then complains about attrition.

Last edited by OffRoadFun : 20th March 2023 at 12:41.
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Old 20th March 2023, 12:57   #1018
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Re: Jobs, Attrition & Layoffs in IT companies

I will be honest to admit that I have no idea what a "Lala" company means. If it means a family/individual owned business that is unwilling to share profits with employees, then it is just one way to run a business.

Founders of VC funded companies are not sharing wealth out of some moral/socialist concerns. They want to attract and retain the kind of talent that will make them very rich (people who can innovate and disrupt) and such talent is available only if you are willing share the wealth and almost as a rule, VCs insist on such sharing mechanisms. Business dynamics mandate sharing of wealth with stakeholders. They will also mercilessly downsize and restructure guided by spreadsheets. The fact that employees from such companies hit jackpots is a consequence of the high potential of the employees and not some social justice voodoo.

Family businesses typically run businesses that don't require such exotic talent and these businesses rely on efficient capital deployment and production/operations. They often have to mortgage personal assets to raise capital. They don't have access to risk-free VC funds and they have nobody to pass on the risk (both capital and execution). The business dynamics don't require sharing of wealth because owners take all the risks. They are also usually extremely conservative when it comes to downsizing, etc. When you are "the God person", you are bound to feel the moral pinch to lay off people unlike tech companies where you can blame it on the "system or whatever". It's harder to fire your personal driver compared to firing a company driver - that's how we are wired. Family run businesses find a way to tide over the tough times and retain employees because they know it's good for their business.

Making money is hard work. If you think someone makes a ton of money in an IT company, you probably didn't see how he/she was slogging while in school. World is not a fair place for sure but it's not as unfair as it looks on the surface.

Last edited by androdev : 20th March 2023 at 13:11.
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Old 20th March 2023, 13:24   #1019
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Re: Jobs, Attrition & Layoffs in IT companies

A Lala company is often a small business that is run by a family. You can see that most of the top positions of the company will be occupied by the boss's families and friends (often to it's peril, but not always). That they don't share profits with the employees is no big deal, but the style of functioning (often autocratic) is.
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Old 20th March 2023, 14:35   #1020
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Re: Jobs, Attrition & Layoffs in IT companies

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Originally Posted by OffRoadFun View Post
How do we land up here? Why is it relevant whether I have 1000Cr business built or not?
I think VN is talking about it because you are completely disregarding the economic realities of running a business. So he is giving you business owner's perspective. Actually, you don't need build a 1000Cr business, even single digit crore business will teach these lessons.

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What's wrong in sharing this wealth with the employees?
Oh, is that what it is? That means if a startup is making losses every year, employees would work for free? Most Indians startups are making losses every year, yet they are the top paymasters, forcing rest of the industry to pay unrealistic wages.

VCs have destroyed the understanding of economics amongst startup founders and even their employees. I understand the need for capital for setting up the business in the initial years. However, if VCs keep paying the operational expenses while fattening the pig for slaughter (i.e. increasing valuation before exit), founders won't care about keeping input cost below sale price. If your startup spends 1Cr/month in order to generate a revenue of 25L/month, then it is a charity. How do you share the loss of 75L/month among the employees every month? Myntra has not made profit in 15 years of its existence. If Myntra increases the prices to merely match the input cost, they will lose most of their customers. How is this a business? Will Swiggy or Zomato be any different? Their losses are in 1000s of crores every year.

I run a bootstrapped software company myself, and we do make modest profits. However, if we are forced to increase the wages wildly because of the irresponsible wage practices by funded loss making companies with no financial discipline, we too will start making losses. These irresponsible funded loss making companies poison the well for everyone because they don't care to do the basic arithmetic. This is what happened in the last couple years.
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