US economy and Indian IT outsourcing Companies

As part of its appraisal process, Satyam identifies ``around 5 percent'' of its employees for ``performance improvement,'' the company said in a separate statement by e- mail. About half of them leave ``either voluntarily or involuntarily,'' Satyam said, adding the company had completed its latest appraisal a few weeks ago.

Tata Consultancy, India's biggest software services company, fell 5.9 percent to 762.8 rupees at the close; Infosys, the second-biggest, fell 4 percent to 1,578.15 rupees, and Wipro Ltd., the No. 3, fell 3.8 percent to 403.9 rupees.

Satyam declined 9.5 percent to 368.5 rupees at the close of Mumbai trading, the most since April 2003, to become the second- worst performer on the benchmark Sensitive Index, which fell 3.4 percent today. Satyam led a decline in technology stocks on concern that the deepening credit crisis in the U.S. will force clients to cut back on orders.

Satyam plans to Axe 4500 jobs.This translates to a little less than 9 per cent of the 51,000 employees that the company employs. Company sources say 1,500 employees have been put under the performance improvement plan (PIP), euphemism for employees put on watch list and asked to shape up or ship out.

Apart from this, 3,000 others have not been given any increment in the last appraisal cycle, thereby indicating that their services are dispensable.

"This 1,500 plus 3,000 equals 4,500, which indicates the total number of persons who could be eased out of the company," the source said.

On Friday, all employees received an email from the company chief Ramalinga Raju warning them, especially the ones on the bench, to not bunk office and be in their best dress code, failing which they may face strict disciplinary action.

Yeterday one of the leading equity banker Lehman bothers filing Bankruptcy and the the outright deal of Merill lucnh for 50$ billion with Bank of America the Wall street in to Jittery.This termor would have a serious impact with the oustsourcing scenerio and the survival of the Indian IT companies majorly.It is definitely sure the going will not be good.

The lay of 26000 employees of Lehman brothers and Merill Lycnch 60000 employees of Merill Lynch.The subprime crsis looming in the US economy for a period of more than 2 years and now the recent down fall of this world's leading investment bankers will put a strong road block to the outsourcing scenerio.

In the begining of this year one of the leading investment banker BSMA sold it stake JP morgan and the troubled scenerio of the major investment bankers had given a clear signal.There is a dent in the BFSI segment for this outsourcing companies.

Now the real trouble is for the major outsourcing companies Infosys,Wipro,TCS,Satyam and HCL.The biggest challenge is how they are going to manage the resources on this Slow down period.

Also the campus placement offers by these bankers to the IIM and IISB's are in a big question mark?.As 68% of the offers on the Campus recruits are from these investement bankers.

The slow down have started witnessing with the bad news from US and let we wait and watch how the real impact on the IT outsourcing companies in India.