Will Satyam lay off 8,000 non-IT staff from June?

Satyam Computer is likely to sack most of its non-billable staff of up to 8,000 working in marketing, HR and administration wings,after Tech Mahindra takes charge of the company from June 1.

A Satyam official said there is no doubt that there will be large-scale sacking mostly of the support and non-billable staff (other than hardcore software engineers) once Tech Mahindra (the new owner of the company) directors come on board from June 1.

The surplus staff is about 10,000-12,000 and the 'least painful' ways of sacking is asking the bench, non-billable and support staff to go.

The company spokesperson, when contacted, said that at the moment these are mere speculations.

Sources also said the outsourcer may opt for "virtual pool" sacking method whereby the company would ask some of the staff to take 75 per cent of its salary and take one-year off and look for a job elsewhere with the fragile assurance that they would be recalled, if required.

Tech Mahindra CEO Vineet Nayyar, who will also come on board of Satyam from June after it acquired fraud hit company last month, had said last week that Satyam has about 10,000 surplus staff and "we are looking at the least painful ways to tackle the problem."

Satyam has already called back most of its onsite staff to avoid further costs and most of them may be asked to quit, said the official.

About 3,000 people are on the bench and there is a surplus manpower even in the R&D and engineering units, sources said.

Dwindling revenues are the primary reasons for Tech Mahindra to opt for such a cost-cutting measure, Tech Mahindra official said.

Kiran Karnik, chairman of Government-appointed board of Satyam, said revenues are falling and cost-cutting measures have to be taken up. But he had ruled out lay-offs.

Agencies

Have small IT firms outwit the big IT giants?

It is not a secret that are at the lower rung of the competition hierarchy in the European technology market. Indian firms still have a long way to go before they get lucrative contracts from that market. But, they seem to be gradually creeping into European market, with smaller firms taking a clear competitive edge than IT biggies like Infosys and TCS, reports CXO today.

"I find that the big Indian companies are too pragmatic. Not able to take my requests simply...CMM Level 5 etc is of no use to me... all I want is my requirement to be fulfilled," Paul Schewefer, Senior Vice President and Chief Information Officer, Continental AG.

It seems that a market like Europe demands a highly aggressive planning and quick implementation of strategies if one wants to make the cut. For small companies with lesser number of people, it is comparatively easier to implement changes without having to go through various processes, making it fast. And many small companies in this market have built capabilities in niche areas unlike some giants.

Moreover, Hannover, Germany, based Continental Group's technology expenditure for this year could be up to $500 million. And a lot of that could go to the smaller companies. "Partnering with smaller Indian firms helps them to invest in manpower and technologies, and that helps us as well," said Schewefer.

For the smaller firms, they are looking at the European market via the partnership model. For instance, Aakit Technologies has just sold 26 percent to Germany-based Aequitas Group. "The deal deepens our access to Europe, and also gives our German partner India capabilities," said Tayeb Barodawla, MD, Aakit Technologies.

Earlier, there were reports that Indian IT firms needed long-term deals if they are to make any gain in Europe. It is true that many Indian IT majors are still finding a major share of their revenue from European market through project services, while most of the MNCs drawing revenue from long-term outsourcing contracts.

IT analysts are still of the opinion that top Indian IT companies like TCS, Infosys and Wipro will have to shift focus on long-term outsourcing in order to make significant gains in the European market. These three companies derive around 25 percent of their revenue from European market.

Agencies