Excerpts from an article by Saritha Rai at silicon.com
It looks like the global economic turmoil and the dramatic Wall Street meltdown is beginning to hit Bangalore.
The collapse of top US financial firms will cause a dramatic slowdown in hiring among outsourcing companies. The banking, financial services and insurance sectors account for 40 per cent of revenues for India’s $52 billion outsourcing industry (as of 2007-2008).
Firms such as now-bankrupt Lehman Brothers and bought-out Merrill Lynch were big customers and provided millions of dollars worth of lucrative contracts to Indian technology services companies.
Consequently, in the past home-grown Indian outsourcing companies grew by impressive numbers. Infosys and Wipro, the big two employers in Bangalore, were each hiring 10,000 employees or more during recent years. Such spectacular ramp-ups are unlikely to recur any time soon.
For tech employees, jobs no longer come with a lifetime guarantee. Companies are shedding people in small numbers and keeping their actions under the radar. The dreaded pink slips have arrived in Bangalore.
The biggest indicator of the slowdown is the salaries and raises. It used to be acceptable to have lateral hires ask and get 30 per cent increases on their previous salaries. Annual hikes have varied between 15 to 40 per cent in the good years. All that is now a thing of the past. Wage increases are now down to more realistic, single-digit numbers.
At Wipro, legend has it that chairman Azim Premji would ask that toilet paper be rationed, and insist employees switch off lights and air conditioners when leaving a room.
Still, the day may not be far off when outsourcing companies offer their employees reflective yoga instead of salsa dancing. And then the Bangalore workforce will go back to feeling like average tech workers instead of modern-day Maharajas.