Zensar feeling the Heat: Asks its Employees to Leave

The tumbling dollar and the meltdown in the US mortgage market have found their first victims in India and these are small to mid-size IT companies. Sources have told NDTV that Zensar Technologies has asked 200 employees to leave, reason, to counter sluggish earnings.

“We have asked 85 employees to leave. Its a routine exercise. We cannot afford to entertain employee bench like the large caps with rupee appreciating 10 per cent. We have not changed performance norms over last five years. Performers will be credited and bad performers will have to leave,” said Ganesh Natarajan, Deputy CMD, Zensar Technologies.

And if Zensar is feeling the heat from the dollar, iGATE is cowed down by the US mortgage market meltdown. iGATE has redeployed about 100 employees onto different projects who were early servicing the mortgage market clients. Its revenues has dipped from the mortgage market from 10 – 7 per cent over a quarter.

In a statement to NDTV, N Ramachandran, CFO, iGATE Global Solutions said, “The revenues from mortgage services seem to be flattening at the current levels. However, these revenues continue to be at risk in view of the on-going sub-prime market turmoil. The sub-prime loan originations in the US have almost ceased and the demand for origination services have dried up. We do not expect this to change in the short term.”

Experts say that with demand and realizations both under huge pressure, underlying theme for IT companies across board is cost cutting. Let alone the mid-caps, the larger companies like HCL are now paying less for any fresh hiring.

“On the pressure mounting on mid-caps and that only the better managed ones will survive in the future,” said Nitin Padmanabhan, Senior Manager-Research, ICICI Direct.

Challenging times indeed for the Indian IT pack, business being attacked from all quarters, massive cost cutting is the only way out especially for the mid sized players.
-Tuhina Pandey