Indian IT mayhem continues; Tech Mahindra joins sacking spree

The mayhem in the Indian information technology industry continues, with Tech Mahindra, the country's fifth-largest IT services firm, planning to lay off close to 1,500 employees - around 1.2 per cent of its workforce - across all levels.

Tech Mahindra follows in the footsteps of bigger rivals Infosys, Wipro and Cognizant. The IT majors are in the process of downsizing as protectionist policies in their largest market the US as well as Europe and new technologies shake up the $150-billion Indian IT sector.

Tech Mahindra had close to 117,095 employees across 90 countries as of 31 December 2016. A majority of these employees are based in India. It was not immediately clear which job levels would be impacted as a result of these layoffs.

The company, like its peers, insists that the redundancies are part of the normal appraisal cycle. ''We have a process of weeding out bottom performers every year and this year is no different,'' a Tech Mahindra spokesperson said in a statement.

Earlier this week it was reported that Infosys could axe hundreds of mid and senior-level employees in India, even as it plans to hire 10,000 Americans in the next two years and open four centres in the US to counter the new tougher visa norms. ''Our performance management process provides for a bi-annual assessment of performance. A continued low feedback on performance could lead to certain performance actions, including separation of an individual and this is done only after feedback,'' Infosys said in a statement.

Last week, Cognizant, based in the US but with most of its operations in India, had rolled out a voluntary separation programme for directors, associate vice-presidents and senior vice-presidents, offering them six to nine months of salary (See: After Infosys, Cognizant to ramp up US hiring).

A Cognizant spokesperson had said that the number of employees to whom this voluntary separation programme is being offered represents a very small percentage of the total workforce of the company, but employees were far from being convinced (See: Cognizant employees' groups protest large-scale sackings).

Last month Wipro, India's third-largest information technology service provider, had reportedly sacked 300-600 employees to ''align its workforce with business objectives, strategic priorities of the organisation and requirement of its clients''

These incidents showcase the tight spot that Indian information technology companies find themselves in. On one hand, reducing client spends and pricing pressures are squeezing these companies' margins and bottom lines, while on the other hand, due to increasingly tougher visa regimes by countries like the US, UK, Singapore and Australia, the companies are finding it ever more difficult to carry on with their operations in these countries in a cost-effective manner.