The Hindu Business Line : From ESOPs to pink slips

The IT industry is seeing clear signs of revival, but the party is definitely over. And the message going out to all those dreaming of a high-salaried job in the industry — be realistic in your expectations.

Year 2001 finds itself in an unenviable position in the annals of the IT recruitment scenario in India. For the first time in the Indian IT industry, the demand-supply equation was negatively skewed. Body shoppers drew a blank. Professional human resource consultants got massively impacted. Students in campuses came a cropper with offer letters coming to nought. And the hopes of homebound NRIs were dampened with very few careers coming their way. To cut a long story short, hopes were dashed all around and the media left no stone unturned, and covered the debris of opportunities littered.

Let's take a quick look at why and how this happened, and how things are shaping up now. The IT industry grew at an incomparably feverish pace, thereby bringing about a mismatch in the delicate demand-supply equation. Demand far exceeded supply and the gap seemed not to quickly narrow.

With even the bigger companies — those with a huge revenue base — growing at more than 70 per cent each year, the rat race for qualified professionals started. With not many professionals available in the open market, companies had to heavily count on engineering institutions for their feed.

The big companies went to premier institutions for campus recruitment and started recruiting students a year ahead of their joining — a clear indication of the level of competition. It was probably a dream come true for students, institutions, and placement officers. Newer concepts such as Day 0 and Day 1 slots for companies started doing rounds. And along with it came incredible practices such as `sitting' charges, `signing up' bonuses and `overseas' summer placements.

With competition becoming dog-eat-dog, the numbers game showed its ugly head. The big companies recruited in excess of 100 people from many campuses, and their annual recruitment numbers ran into thousands. Although in most cases there was a clear business pipeline to match the numbers, in some cases it was merely anticipatory. With the global recession surfacing and the IT purse strings of global corporations shrinking, the first signs of panic became visible.

While a good number of IT companies did honour all the offers made — at least in a staggered fashion — the rest, including reputable names, had to either defer or rescind the offers made, much against their wishes and to the chagrin of the student community. Because of the demand-supply lopsidedness, competition had become ugly, salaries and annual hikes incredible and individual aspirations unrealistic. More importantly, the societal and psychological balances were disrupted. The best engineering minds from disciplines as varied as mechanical, civil, aeronautical, instrumentation, chemical, plastics, ceramics and soil made a beeline to IT at the cost of their native industries.

Much of it was unwelcome, but it was a reality that was long due. One should understand that business houses do chalk out robust business plans and normally recruit against those plans. But with the external realities such as the global recession and September 11 throwing things out of gear, the shots were fired and the bullets had to be bitten.

The media played a crucial role and started exposing the harsh realities, and in a way cautioned the stake-holders. But somewhere down the line, it got passionately obsessed with what was happening, and started cherishing every `scoop'. As much of the negatives have already been captured and extensively written about, let me try and highlight some of the awakening and positive fallouts from these developments. Though things have levelled out, the question that looms large in all our minds is, "When the industry bounces back, would we see the same euphoria and extravaganza all over again?" Undoubtedly not, and there are already indications available. The industry is seeing clear signs of revival, but prudence seems to prevail. Recruitment is no longer anticipatory; it's just-in-time and need-based. Attrition has come down significantly as job security and continuity is uppermost in the minds of employees. Performance parameters have got stricter and productivity is seeing an increase through improved utilisation and higher levels of employee commitment. Career growth has slowed down. Salary structuring is showing increased gravity towards performance. Discretionary spending, both at the corporate level and at the individual level, has come down. At the corporate level, it is reflected in higher net margins and at the individual level in fewer vacations to Switzerland! On the other side, the trend of students opting for computing, as a discipline of study, has come down appreciably and mechanical engineers and chemical engineers are raring to join their native industries.

Students are also highly choosy about the companies they want to join and are going by the past record of recruitment and `critical intelligence' from their predecessors already in those companies. Pep marketing talk by companies in campuses on their novel business model, higher compensation along with stock options, visibility and brand equity that attracted hordes of students to them have been thrown to the winds. Any selling on these parameters is today anathema in campuses. The credibility rests with those companies that have honoured the offer letters and provided trustworthy career paths.

But haven't we heard a similar story earlier in the late 1980s when the boom in the financial services arena went bust? There wasn't much hype though about things going wrong as there wasn't much hype surrounding the opportunities and all attendant paraphernalia it brought along with it. The magnitude was manageable. But would we at least learn from this new dawned reality? Certainly, yes. Everyone will be more mature and measured in action. Isn't that good news for all the stake-holders in the IT industry?

The author is Chief Knowledge Officer, Cognizant Technology Solutions

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