Tech Mahindra Ltd has removed about 5,000 employees in its business process outsourcing (BPO) arm in the last 12 months due to “profitability issues”.
From 28,611 at the end of September 30, 2012, the number of employees fell to 23,225 in September 2013, with most of the staff getting the marching orders in the preceding three quarters.
This actually pulled down the total strength to 85,234 from 87,000 in the comparable quarter last year. The number includes the staff from Mahindra Satyam, which Tech Mahindra absorbed last year, and other group firms.
The headcount reduction (in the BPO business) is largely because the company exited five Indian contracts, mostly in the voice segment, according to Sujit Baksi, Chief Executive Officer (Business Services Group) of Tech Mahindra.
The domestic market has become less remunerative for the IT industry, making it to focus on the markets where money is. Increased cost of operations and delayed decision cycles were the main reasons that made the local market less lucrative for big IT firms.
Wage hike
The employees will get a salary hike on January 1. On an average, the offshore staff would get 7 per cent and onsite employees 2.5 per cent. About 70,000 employees would get the hike.
The company reportedly sent letters to the staff. It had pushed the salary hike by a few quarters last year. The company expects an impact of 200 basis points in the third quarter numbers.