IT Minister K.T. Rama Rao has appealed to industry leaders in the State not to terminate jobs of employees, regular, contractual or outsourced, at a time when the pandemic of COVID-19 has caused extreme hardship to all sections of the economy.
The appeal tweeted by the Minister on behalf of the government on Saturday acknowledges that industry sectors, including IT and ITES, were facing multiple challenges due to lockdown that had led to loss of production, revenue and shrinkage of market.
“Yet humanity demands that in this period of crisis, we need to be compassionate towards the workforce that served us for so many years,” he said.
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KTR said the companies may consider other forms of cost cutting including pay cut, deferment of increments, and bonuses.
The State government had already announced salary deferments right from the Chief Minister, Ministers, senior officers and employees at all levels, he added.
He promised that if the industry refrained from job cut and termination, once the country and the State came out of the crisis, the government would ensure enabling conditions for the industry to bounce back.
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The appeal by the Minister evoked positive response from employees in all sectors, particularly in IT/ITES sectors that were fearing job losses.
Hyderabad Software Enterprises Association (HYSEA) president Murali Bollu said it was nice of the Minister to make such an appeal as it could make some think twice and explore other options before laying off employees.
Big companies and companies with deep pockets to reach out to may hold any layoffs for the next couple of months for various reasons. There was short supply of skilled professionals even before COVID happened and there was spike in recruitment. If they let go of some employees because of current difficult situation, they may not get back people of required skills later, he says.
Generally the attrition rate in the IT/ITES is 18 to 25 per cent and to lay off more people because of present crisis may be unsustainable for some companies. Moreover for big companies, the contracts are for three to five years. Their problem may be in securing new project contracts.
However, Mr Murali says for SMEs, it may be tough not to resort to layoffs as they have to pay rentals even if employees are working from home. There is no US-like payroll protection and SMEs generally have one year or less than one year contracts unless they have clients from domains like insurance, health, and education.
In fact, technology companies that were catering to domains like hospitality, tourism, airlines, ticket booking for entertainment were impacted as their client sectors are hit by COVID-19 crisis and such IT companies started giving termination notices to their workforce.
The companies have two choices — across the board pay cut or lay off some employees. “This is also performance appraisal time. One may reduce the pay increase but at the cost of losing some good performers”. Even if the SMEs are compelled to lay off some employees, it will not be more than 1 to 2 per cent of overall IT workforce, he says.