Strong Re slows down hiring in IT

The dollar’s roller-coaster ride — down 14% in the last 12 months even as the rupee appreciated 7% — is giving jitters to Indian IT/ITES firms. Many of them have reported lower margins last quarter, while their costs have moved north.
The fallout: Many of them have resorted to cutting costs to save margins. Now, it’s affecting their HR departments as well. Many IT firms have cut down their bench strength, while others are going slow on hiring plans. Some are avoiding lateral hiring, or even if they do, it’s completely need-based — they are keeping it to the minimum.
IT recruiters confirm that bench strength in some IT companies has reduced by almost 20-25%. “There is lot of focus on 100% utilisation of resources to save cost. Almost all major IT companies are cutting down bench strength,” confirms Nishu Miglani, general manager, IT, Manpower India. At Cognizant for example, the focus has been on increasing employee utilisation levels by two percentage points, from 61% to 63% in the second quarter of the year. “Every 1% appreciation of the rupee negatively impacts our operating margins by around 20 basis points.
The appreciation of the rupee versus the dollar in the second quarter of 2007 impacted our operating margin by around 150 basis points,” informs Bhaskar Das, V-P, human resources, Cognizant. At Infogain Corporation, bench strength has been brought down from 15% to 10%. “Most of our clients are US-based, so we are facing a lot of pressure.
We had to take certain steps to save our margins,” says Pankaj Shankar, global HR head, Infogain. What’s more, hiring too has gone down. “While we hired 30-35 people on an average every month, now their numbers have gone down. And it’s project-based.” IT recruitment firms say hiring across the board has gone down by 5% in the last two months. Most of them are now resorting to ‘just in time hiring’.
At MphasiS, the focus is on saving margins and pushing up efficiency. As Elango, chief HR Officer at MphasiS, explains: “Earlier, I would be easy about hiring, but now it’s about saving margins. Now we stick more to references, or go back to check those who did not accept our offers earlier.”

Source: TOI