IBM says sacking report factually incorrect, govt too allays layoff fears

Tech giant IBM on Wednesday clarified that the company is not firing 5,000 employees and the media reports regarding the same were factually incorrect.

Business Standard on Tuesday had said the the company was laying off 5,000 employees in India, joining the league of Cognizant, Infosys and Wipro in pruning staff as the IT sector faces technology shifts towards automation, and from manning legacy system to digital and cloud..

IBM also said that it was continuing to re-skill and rebalance its employee workforce.

“This is factually incorrect. We are not going to comment further on rumours and speculation. Re-skilling and rebalancing is an ongoing process as we accelerate the benefits of cognitive and cloud technologies for clients around the world,” a spokesperson for IBM said in an email.

Economic Times reported that when IBM had sacked 200 employees in a business unit last year, it had done so in a staggered manner over six months.

However, Financial Express reported that IBM India’s performance -ased appraisal exercise of its employees is likely to impact around 1-2 per cent of its total employee strength.

IBM India has an estimated employee strength of around 1.5 lakh and this time around the technology major is likely to be selective in identifying the non-performers.

IBM India was looking at a target of "achieving 100 per cent utilisation" across all projects with a shift in business and increased demand for digital-technology based services, a person familiar with the development said.

For example, if a project currently has eight software engineers, roughly two of them are released and redeployed on other projects to achieve full utilisation across projects. "However, no one is kept idle on the bench now," an engineer at IBM said. "In some cases, people have to upgrade themselves with new technology skills to get redeployed. But, those who are not willing are at risk and often told to go."

Kris Lakshmikanth, chairman and managing director of recruiting agency The Head Hunters India, echoes the engineer at the company: "If you are on the Bench at IBM, you are in trouble. While net addition has come down, the company is trimming its workforce gradually."

Industry body Nasscom has maintained that workforce realignment in IT services linked to performance appraisal processes is a regular feature every year.

It said “Skilling and workforce realignment are essential to remain competitive in international markets. It needs to be appreciated that such workforce realignment is a normal part of the internal process of companies based on their own operational imperatives,” it had stated.

The government too sought to allay fears of large scale layoffs by tech firms saying the IT sector remains "robust" and is, in fact, moving beyond plain-vanilla back office services to highly skilled jobs.

IT Secretary Aruna Sundararajan said the IT companies have assured that there is "nothing unusual" this year and decision to not renew some contracts were part of the annual appraisal process.

Some of the companies which have been named (as undertaking job cuts) have clarified that there is nothing big this year," she said on the sidelines of Broadband India Forum event. Over the past few weeks, there have been reports of layoffs across the IT sector.

Tech majors like Wipro, Infosys, Cognizant, and, more recently, Tech Mahindra have initiated annual performance reviews, a process that weeds out bottom performers or non performers. This has added to fears that thousands of employees in the sector could be shown the door over the next few weeks.

"As part of annual appraisals, they may not be renewing contract of some people but it is absolutely incorrect to assume that suddenly this year a large number of jobs are being shed," Sundararajan said.

Stating that the Indian IT sector will grow at 8-9 per cent this year, the IT Secretary exuded confidence that the industry will continue to hire in large numbers as new technologies like digital payments, cyber security, big data and cloud gain traction.

"Any report that is interpreting this change as a large scale loss of jobs in the IT sector would be factually misleading and incorrect," she said.