Indian IT industry tightens employee performance parameters

Performance evaluation gets stringent as IT industry battles uncertain macroeconomic conditions and increased automation

With growth faltering due to macroeconomic conditions and increasing use of automation and technology such as artificial intelligence, the IT services industry is increasingly looking to make performance evaluation more stringent.

A recent news report stated that Infosys, country's second largest IT Services provider, has sacked 500 employees. The story said that some of these employees could not complete the required 9.15 hours of work every day.

In a statement, Infosys said that the exits are no different from what it has been following in the past and any assertion otherwise is absolutely incorrect.

“We have a progressive policy for the rare instances where some of our employees do not meet expected standards of performance or commitments. After adequate counselling, those found consistently deviating from expectations are asked to find alternate employment. This applies to employees across levels and is not connected with any business situation that is not in the control of the employee. The numbers are very low and this is no different from what we have done in the past,” the company said.

The Indian IT industry is the largest employer of engineers in the country. The total employee base of the industry touched 3.7 million in FY16. Nasscom, the body representing the IT services industry has also hinted towards a low hiring trend. The industry added 200,000 employees in FY16, compared with 230,000 in FY15. For FY17, the industry expects the employee addition to be around 200,000.

 

While analysts concur that pink slips have become the norm in the industry as growth tapers off and processes get automated, they are not en masse as has happened in past.

“Pink slips made a comeback a year back. One reason is growth in demand coming down and two, there is no linear relation in growth and headcount. A lot of processes are also getting automated,” said Kris Lakshmikanth, founder CEO & MD, Head Hunters India, a boutique executive search firm.

Lakshmikanth also cautions that employees who are on the bench are more vulnerable to get pink slips. “If you are on bench for three months, companies send those employees for performance improvement programme, and if you are not billable for six months then you will be asked to go. This has been a common practice at MNCs such as IBM, but lately Indian IT firms too are following this,” he added.

A M Naik, chairman Larsen & Toubro and non-executive vice-chairman L&T Infotech during the firms IPO launch said that the 18.5% attrition of the IT services company does not represent voluntary attrition.

“Over the years we have continuously become more efficient by use of technology & various tools and as we hire talent that caters to new technology. Some of the people cannot cope with such changes. So the 18.5 per cent attrition does not represent voluntary retirement or voluntary resignation. Rather less than 12 per cent of people normally leave voluntarily, the rest of them become obsolete, either due to inefficiency or due to lack of technological knowledge,” he said.

“Recently one of the top four IT services firm sacked an employee who was with them for 6 years. The reason given was performance. The employee approached the labour court because for the last 15 years his performance evaluation was above average and suddenly in the 16th year his performance was low. He challenged this decision and the company had to reinstate him. Companies will look at the mid-manager level especially employees in the 35-45 age group more closely as they have option to promote a younger person with a low salary to that position,” said Lakshmikanth.

The industry is also trying to upgrade the skill level of its employees as the industry faces the challenge of digital disruption. Indian IT players over the last few years have pressed the paddle for the retraining of its employee base as new technologies take centre-stage at client’s business environment. For instance, Tata Consultancy Services (TCS), country's largest IT services provider, is training 100,000 employees on digital technology. Similarly, Infosys had announced that it will train 40 per cent of its workforce in design thinking.

Pravin Rao, COO, Infosys, in an earlier interview said that the company wants to leverage the benefits of automation, particularly at a lateral level, and figure out how to do more of just-in-time hiring on a fresher level. "On an average last year, we did lateral hiring of about 2,500-3,000 every quarter (for Infosys standalone), but with more and more full-time employee equivalents being released through automation, and automation benefits kicking in, we would expect to see some part of reduction in the hiring numbers," said Rao.