India IT growth: Nasscom Strategic Review 2016

Employees of Wipro Ltd are nervous as the information technology giant has kicked off its annual appraisal process this month.

The first of the several reviews, known as L1 or level 1, has been completed, and at least some employees are feeling the pressure.

“I’ve got to know that I have been marked as NI (needs improvement),” said a Kochi-based employee of the company. “I was an E for last two quarters,” he said.

Employees marked ‘NI’ are at a high risk of being asked to go.

Media OrgLay-off Estimate
Hindu600
Xinhua500
Quint100s
Deccan Herald700
Business Std500
Financial Exp350-400
NDTV600
Scroll100s

Out of the five-tier ranking system employed by the company, E or exceptional contribution ranks second, while NI ranks at the bottom.

Typically, annual appraisals follow the pattern of quarterly ratings, but this time, team leaders are under pressure to manage costs and manpower like never before, according to multiple employees we spoke to.

Any employee who is dissatisfied by the appraisal process can appeal to an internal ombudsman, according to employees, and last year, some had resorted to the process.

No official numbers or data about what Wipro plans to do on the employee front has been made available.

UPDATE: Since this article was published, various media organizations have been able to get various estimates of the number of employees being asked to go. See table above.

The company has also tightened its rules on attendance and on-campus presence requirements in recent weeks.

However, clarity is expected on Tuesday when the company outlines its financial performance for the January-March quarter.

Though not the biggest, Wipro ranks among the top five IT services companies in India and is among the top 10 employers in the country.

It has nearly 180,000 employees on its rolls and even a 10% reduction in its headcount would mean a lay-off involving 18,000 people.

Three months ago, Wipro said its program of handing over some of the low-level work in the company to software was going better than expected.

Against a target of releasing 4,500 employees under its automation program over the nine months from July 2016 to March 2017, the company was able to relieve 7,000 employees in just the six months from July to December, 2016.

IMPACT ON INDIA

Information technology and BPO services industry contributes almost 10% of India’s GDP and employs about 4 mln (40 lakh) people in country.

The sector has seen strong growth over the last two decades, but has fallen upon hard times in recent years due to a shift in how big corporations and organizations are meeting their IT needs.

Unlike earlier, companies are increasingly starting to shift away from local, customized software maintained by onsite professionals to remotely maintained and highly automated solutions that require a small fraction of the earlier manpower to manage.

This is forcing companies like Cognizant Technology Solutions, Infosys Ltd, Tata Consultancy Services and Wipro to adapt by changing their business model and offering lower cost solutions that depend not on armies of engineers, but on artificial intelligence provided by sophisticated software.

This has been exacerbated by legal changes taking place in the United States. President Donald Trump yesterday signed an order asking his officials to completely overhaul the current system of issuing H1B visas.

At present, most H1B visas issued by the American government goes to Indian IT workers who are sent by outsourcing firms from India to work on their clients’ premises for years together.

It is alleged that doing so amounts to misuse of the H1B visa program, which was meant to bring in high-skilled, specialized talent to the country when such people could not be found inside the borders.

BAD NEWS YEAR?

Cognizant, which was among the first IT companies to conduct its annual appraisal, was in the never for several days after it was reported that the company would ask thousands of its employees to leave in an effort to get in shape for a changing market.

Though the initial estimate reported by the media was around 6,000-7,000, the eventual number could be substantially different, according to our latest information. The company had around 2.6 lakh employees as of the end of December.

FITE, an association of IT professionals, has urged Cognizant employees not to submit their resignations, but instead fight for their true compensations under Indian law.

Tata Consultancy Services has largely completed its annual appraisal process, and Infosys is scheduled to conduct the process over this month and the next.

NOTE: We haveĀ emailed Wipro for its comments at 9 AM on 19-04-2017. The article will be updated when a response is received from the company.

 

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