Patni hands pink slips to 400 'non-performers'

MUMBAI / BANGALORE: After Tata Consultancy Services and IBM Global Services, Patni Computer Systems has laid off close to 400 employees citing non-performance issues. The country’s sixth-largest exporter said it was part of a routine appraisal exercise, carried out every year to weed out non-performers, and not related to any slowdown issues.

“This was an absolutely regular appraisal that is important for any performance-driven organisation. It is something standard we do every year. Employees who have got 0-1 rating on a scale of 5 typically form the basis for the first-level shortlist. These are performance-based resignations; we’ve not issued any termination letters,” said Rajesh Padmanabhan, executive vice-president and head – global HR, Patni. He said the comparable figure for last year was 148.

In February this year, in the backdrop of a pronounced slowdown in the US, TCS had asked about 500 employees to leave for non-performance. Shortly afterwards, IBM was reported to have laid off 700 freshers. In case of TCS, the figure was about 0.5% of its total workforce and for IBM, about 1% of its India workforce. For Patni, the figure is closer to 3% of its 14,800 workforce.

A Patni spokesperson said the company continued to be a net hirer. “Retrenchment is a word used when you are facing negative growth or no growth and cutting down on your labour costs. We continue to recruit — the number of new employees we intend to hire, according to our quarterly results communication, is about 2,000,” said a Patni spokesperson.

ndustry sources said the employees were asked to leave a fortnight ago and some of them were even at the designation of project manager. “Usually, these do not happen at project manager levels. But I know in this case, a project manager working on a GE (General Electric) contract was asked to leave,” said a source, with knowledge on the development, who did not wish to be identified.

Some people in the industry attributed the layoffs to the challenging business outlook Patni and other software companies were facing. “The performance index is being unfairly used on people on the bench. These employees are not working due to lack of projects,” said a person closely associated with a number of software companies. Bench is a term used to indicate employees who are not working on any available projects because they are undergoing training or are between projects.

As a strategy, companies also maintain a bench in readiness for new projects. In a slowdown, because of postponement or cancellation of projects, the bench size increases more than what companies plan for. The Patni stock has risen 15% on the BSE in one month on the expectations of a buyback, which has now been announced for July 10. In the same period, the IT index has gained 2.43%. On Tuesday, the stock ended almost flat at Rs 238.70 on BSE.

The Economic Times dt. 10.7.08