Tech Mahindra accepts senior workers' pay cut offer

It would be a temporary measure for a few quarters, say sources

The Tech Mahindra management has accepted the offer of its top 25-odd employees to take pay cuts of 10-20 per cent, said sources.

The offer, which was made by employees in the ranks of senior vice-president and above, came after the company’s uninspiring performance in the past few quarters. The employees wrote an email to the senior management, including to Chief Executive Officer C P Gurnani, requesting for the pay cut. This cut is likely to be a temporary measure, lasting a few quarters till things improve, said sources.

When contacted, a Tech Mahindra spokesperson refused to comment on this development.

However, company sources told Business Standard that there has been considerable talk in the information technology (IT) industry that employees at the middle or lower rung have been on the firing line, both in terms of salary increments as well as job security, whereas the senior employees seem to be much better protected. “While the number of employees who have taken this isn’t high, this gesture may give confidence to other employees that their seniors are with them in this tense period for industry,” said a source.

The company’s total headcount fell by 1,713 to 115,980 at the end of the first quarter of 2017-18 from Q4 FY17. The headcount of software professionals and sales staff fell in the first quarter while the number of BPO professionals rose. On a year-on-year basis, the number of employees was up by around 8,700. 
 

However, while this was the first quarter of employee decline in the company, there are fears that if the slowdown in the sector continues, more employees could lose their jobs in the tech industry.

In the first quarter of 2017-18, the headcount of Tata Consultancy Services, the country’s largest software company, fell by 1,400 over March 2017 quarter, whereas Infosys’ headcount was down by 1,800. Nasdaq-listed Cognizant’s employee count fell by over 4,000 in the same period.

The offer from Tech Mahindra’s senior employees comes at a time when India’s $150-billion IT industry is under considerable pressure due to the US government’s strong reservations on the H1-B visa and their inability to diversify aggressively into more sophisticated and remunerative segments like artificial intelligence.

In the past few months, there have been several protests against sacking of employees by top IT companies. Recently, an audio clip that went viral on the internet, had a Tech Mahindra human resources executive threatening an employee that he would be fired if he did not resign the same day. This prompted Gurnani and Mahindra Group Chairman Anand Mahindra to tweet their apologies for the treatment, with Mahindra tweeting that the firm's core value is to preserve the dignity of the individual.

Many IT employees have also come together and formed a union — Information Technology Employees Union. This union has been holding protests against the sacking of employees by companies under the pretext of non-performance. According to reports, the union is planning to hold another protest at Freedom Park in Bengaluru on Saturday.

Tough times

* The Tech Mahindra management has accepted the offer of its top 25-odd employees to take pay cuts of 10-20 per cent, said sources

* The offers were made by those in the ranks of senior vice-president and above

* All this comes on the heels of the company's uninspiring performance over the past few quarters