IT companies in Kerala face heat of slowdown

19 March 2009
Thiruvananthapuram: The global economic slowdown has taken its toll on the IT companies in Kerala, with some cutting salaries, while some others have already having informed stakeholders that they have no option but to cut operating costs.

The IT sector in the state has reached an annual turnover of around Rs.1,500 crore (Rs.15 billion/$300 million), providing direct employment to 60,000 people, of which close to 30,000 are employed at the various Technopark campus here and Infopark campus at Kochi.

Speaking to IANS, Sunil Gupta, chief executive of the New Jersey headquartered Collabera Enterprise Solution said companies had now started looking at various options for cost-cutting and started implementing them as well.

"We are not cutting salaries but maintaining status quo on increments. We are assessing the performance of our employees," said Gupta, who was the founder president of the G-Tech group of Technopark companies here.

"Earlier we were giving a flat 17-20 percent hike. But now, due to the slowdown, we will go in for performance-based evaluation."

Executives in some other firms in the state capital said their companies were adopting a more direct model, with salary cuts ranging from 15-20 percent.

"We have been told that our salary will be cut and that portion would be kept aside. The situation will be reviewed every three months. If the management sees some improvement, a portion of that salary will be given back to the employees," said an executive.

M. Vasudevan, a top official of Technopark, said that IT firms were also cutting costs, but there was no drastic action similar to what was happening in other IT parks in the country.

"Yes, salaries are being cut or status quo is being maintained. Employees have realised that there is no other option. They know that when the good times come back, they would be compensated," said Vasudevan.

The slowdown has also affected suppliers of computers and peripherals on rentals. "An animation company at Technopark asked us to take back 20 high-end computers, which we had given on monthly rental. One of their projects got cancelled," said an official.

The Kerala government has decided to chip in to help the companies in various Technopark and Infopark campuses. It has decided to defer payment of a part of the rent due from these companies in the next fiscal.