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MNCs pad up to cut jobs in India
Economic Times - India
NEW DELHI: The past 12 months have been turbulent for Indian
MNC employees. Their most recent tensions spring from the
layoffs announced by firms like P&G, SBC and Oracle, after
their big-ticket acquisitions . It is a move that could
spell disaster for the Indian arms of the acquired companies
— Gillette, AT&T and Peoplesoft.
The domestic arms, too, will have to lay off people to meet
targets, though the numbers here will be smaller because of
low employee costs. However, there is no doubt that the once
aspirational and cushy MNC job isn’t that comfortable any
more.
Procter & Gamble announced after it acquired Gillette that
it would shed 6,000 jobs worldwide. SBC puts the number at
13,000, and Oracle proposes to cut 5,000 from the merged
entity. As the actual number of job cuts in India is still
not clear, Indian subsidiaries reel under the uncertainty.
Most Indian teams do not have enough visibility at company
headquarters. This makes uncertainty much more threatening
locally, says R Suresh, CEO, Stanton Chase.
In the past year, apart from M&As, restructuring exercises
also saw a the best of MNCs laying off people. Some
companies like FMCG biggie HLL had to let go of employees
for the first time, though it does not acknowledge it. The
list also includes financial services entities like HSBC and
JP Morgan.
Layoffs are very common outside India. Every company needs
to perform better each quarter, and often, laying off people
is the quickest way to show returns to shareholders,
explains Sanjay Bharwani, CEO, Watson Wyatt, an HR
consulting firm.
Over the past year, some MNCs realigned their regional
businesses and consolidated production, resulting in
shutting down of Indian manufacturing units.
For example, Sony India shut down its plant in Bhiwandi some
months ago, displacing more than 400 workers.
“Unfortunately, the fate of Indian employees of MNCs will be
more in the hands of people outside India,” says Atul Vohra,
partner, Transearch.
The global outplacement firm Challenger, Gray and Christmas,
which tracks displacements, says companies cut 92,351 jobs
in January. It warns that M&A activity could lead to a rise
in layoffs.
A major reason being cited for layoffs is the fact that they
have become central to cost-cutting efforts. As Indian arms
of MNCs start following policies like ZOG (zero overhead
growth), layoffs become a part and parcel of corporate life.
Globally, most big companies lay off people to become leaner
and more competitive. In the recent past, global companies
that have announced layoffs include Deutsche Bank, Pfizer,
Kodak and Cap Gemini.
And to make matters worse for MNC employees in India, some
firms like GE have institutionalised layoffs and cut the
bottom 10% of the workforce every year as part of their
talent management exercise. |
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