US RECESSION TO HIT INDIAN JOBS?

Neelima Mahajan-Bansal, New Delhi
The Times of India

As the fear of a US recession looms large, how will it impact Indian companies? Will it lead to belt-tightening and job cuts? While there are no easy answers to that, it is clear that while there isn't a doomsday scenario yet, dark clouds on the horizon.

IT companies will be the worst hit. "India as a product base will be in for a hard time," says Manish Sabharwal, chairman, TeamLease Services. "In IT companies, we are bound to see a reduction in headcount and blunted wage acceleration over next two years." Early signs of an impact in IT are visible. Says Vishal Chibber, head of HR at Kelly Services India, a staffing company and HR solutions provider, "The benchstrength in IT companies has reduced and in some cases, completely evaporated."

Typically, IT companies would keep a benchstrength of 20-25% but now they are putting as many people as possible on live projects. "Also, they are relying more on fresh hires rather than lateral hires to push the average salary cost down," adds Chibber.

Similarly, people graduating from engineering colleges already have deferred offers and your negotiating powers with employers are down if you have just 2-3 years of experience.

There are other sectors too that are bound to bear the brunt — primarily export-oriented industries like textiles, pharma and auto components. Says Kelly Services' Chibber, "Some companies in these sectors are seeing a rationalization in workforce internally." This means: there is a freeze on hiring and companies are trying to make best with their current manpower."

But could job cuts in US also mean outsourcing of jobs to India? Opinion is divided on this one. Says TeamLease's Sabharwal, "This won't happen immediately. The US is headed for huge demand deflation and they probably do not need so much capacity."

Adds Chibber, "India's cost advantage as an outsourcing destination has eroded as salaries have risen. Countries like the Philippines, Indonesia and Ireland are more attractive in terms of cost." But there's a bright side too. Says E. Balaji, COO, Ma Foi Management Consultants, "While it is difficult to say in which direction the wind will blow, companies with captive centers in India are likely to raise their India headcounts."