IT headhunters express shock

TV Mohandas Pai,Director-HR,Infosys expressed deep shock at events unfolded at Satyam.

After resignation by B Ramalinga Raju,who is now the ex-Chairman of Satyam Computers,FE spoke with representatives from the HR and recruitment community to get their reaction on how the crisis would impact Satyam employees and the talent pool dynamics within the industry.

TV Mohandas Pai,member of the board and director Human Resources at Infosys expressed deep shock at the events unfolded on Wednesday at Satyam. It is an unfortunate situation and the extent of fraud is unprecedented. We sincerely hope that regulators and the government bring the wrong doers to justice and that they are duly punished. We hope the Satyam incident is seen as an isolated incident and it does not go on to represent the industry and the larger corporate environment. When asked what the outcome would be for employees Pai said,It is too early to say what the outcome will be for employees but we regret the situation innocuous employees at Satyam face because of the irresponsibility of higher ups in the organisation.

On speaking with representatives at Korn/Ferry International,EgonZehnder International and Ma Foi Management Consultants the consensus was common. Even in a worst case scenario if employees were to be in the job market there would be no problem for good people to get absorbed. Wipro TCS and Infosys in most of their good years have hired 10,000 to 15,000 employees each. These are just the big players. It is true that companies including those in the IT and ITeS sector have slowed down on hiring but they are still continuing to hire. The IT sector employees may not get the 30 to 40% salary hikes they have been used to but they would still get increases at new companies comparable to the 10 to 15% raises they could expect from their existing employer and in a worst case scenario they would get lateral offers. Broadly speaking,the average salary for junior employees at IT firms is about Rs 8 to 10 lakh and Rs 20 to 35 lakhs at the mid management level. Of course these vary depending on size of company and if they are a global or a national player.

Joy Nandi,Korn/Ferry International Client Partner responsible for the Global Technology Market said of the Satyam debacle,It is not a talent related but a finance related issue. How the future of the company unfolds is still very uncertain. There could be one of several scenarios and each would have a different impact on employees. In a take over situation the company may take some dire steps to make its balance sheet look better and therefore they would reduce operational cost. This will help the company look better than how the stock is currently doing. In this scenario the company may consider reducing its head count to show less operational cost. It is commonly known that 60% of cost in IT/ ITeS firms is in fact talent related. Another hypothetical situation wherein employees may be impacted is if some large clients cancel their projects with Satyam which may necessitate downsizing.

Amitabh Sharma who leads the technology and communication practice for Egon Zehnder International in India says of the debacle,Though junior and mid management employees need not be concerned about the events at Satyam,there is bound to be some taint associated with senior management. Sharma furtheradds,This is definitely a watershed incident and highlights the urgency for strong corporate governance and for ethical,truly independent non executive directors on the board.

In the opinion of E Balaji CEO Ma Foi Management Consultants,The institutional investors who have a stake in the company will be battling to see it emerge with as few bruises as possible. Raju himself was reportedly holding 9% stake in the company when the debacle was first brought to light but later because of margin calls his stake fell to 4% or 3%. 94% to 95% of the share still stays with institutions and share holders. At present Aberdeen is the single largest share holder holding in excess of 5% stake in the company. Templeton,a globally reputed financial institution is another large stake holder in the company.

Speaking on the broader outlook within the IT and ITeS sector Sharma says,Technology companies will continue to grow though not as rapidly. We are noticing a trend with captive IT companies such as British Airways or Deutsche Banks are continuing to expand in India because of cost pressures overseas and if they have a critical mass it makes good business sense for the company. However third party companies seem to have a reduced growth wherein the number of deals seems to have reduced but the size of deals seem larger in the $100 to 300 million range.

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E Balaji adds,Satyam being a conventional large IT company like TCS,Wipro and Infosys would have bulk of their employees about 65% at the bottom of the pyramid. Most of these employees have been recruited from campuses and are a talented and capable lot of people.

In a scenario wherein the company were also to be acquired,any acquiring company would look at elements such as productivity analysis,customer contracts and for an acquiring company more headcount means more revenue. Definitely if the company is acquired the acquiring company will be interested to retain the talent which is the bread and butter of any IT company.

Ma Foi has an office in Hyderabad and so far we have not seen a flood of resumes from the company. The impression is that the employees are bracing the challenge and not necessairly looking out yet.