India’s Wipro said the number of staff working in its software services division declined in the final quarter of its latest fiscal year – the first time in the outsourcing company’s recent history its workforce has shrunk.
India’s third-largest information technology company said staff numbers fell by 401 employees to 74,986 in the unit during the three months to the end of March, in the strongest sign yet that India’s once high-flying software industry is suffering one of its deepest slowdowns.
“The large IT companies and even the smaller ones are clearly not in hiring mode,” said Pratik Kumar, executive vice-president, human resources, at Wipro.
A generation of young Indians has benefited from two decades of stellar growth in the outsourcing industry, walking straight into jobs after graduation.
But in the past year, their fortunes have turned upside down as foreign multinational clients have slashed their IT budgets and demanded that vendors in India and other outsourcing centres provide lower prices.
A study released this week by McKinsey, the management consultancy, and the National Association of Software Services Companies, the Indian IT industry body, forecast the sector would miss by 12 months its target for export revenues of $60bn by 2010. The industry’s export revenue is currently $47bn.
Wipro on Wednesday reported revenue growth of 28 per cent to Rs255.4bn ($5.1bn) in the year ended March 31 2009 against the previous year, partly helped by acquisitions. Net profit rose 25 per cent to Rs44bn against a year earlier.
However, sales in the fourth quarter were Rs64.5bn, down 2.5 per cent compared with the previous quarter, and net profit was virtually flat at Rs10.1bn over the same period, as the global economic crisis began to bite.
The group, which also has a small consumer products division, said the picture was worse for its IT services business on a standalone basis, with revenue from the unit declining nearly 5 per cent during the final quarter of the fiscal year ending March 2009 against the previous three months, and set for another decline this quarter.
Wipro’s shares ended up 1.95 per cent at Rs279.60 per share compared with a marginal drop in the overall market after the results slightly beat analysts’ forecasts.
Mr Kumar said that in spite of the cuts in overall numbers, the group was still hiring experienced talent and would honour commitments to graduates last year numbering about 7,000.
“No crisis should go to waste, so we should use this opportunity to pick up global talent,” Mr Kumar said.
While his rivals, industry number one TCS and number two Infosys, are also honouring commitments made earlier to graduates, they have also cut back on new hiring.
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