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Consequently the
management of these companies reshuffled their strategies in general and HR
policies in particular. For instance, some companies resorted to acquiring
foreign delivery centers (such as Apollo Health Street's acquisition of Zavata
Inc. and Firstsource Solutions Ltd.'s acquisition of MedAssist Inc.); cutting
down operational costs; moving from input-based pricing to output-based pricing
in case of BPOs; concentrating on domestic businesses and hedging, which was yet
another key solution to evade future US Dollar declines which was adopted by top
notch IT companies and BPOs.
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On the HR front, the companies resorted to slashing
the number of recruitments and retaining the best of the talented
employees. The companies also explored the possibility of increasing the
number of working hours and shift from 5-day week schedule to 6-day
week. In addition to this, even the top companies were forced to reduce
their wage bills. An Assocham Eco Pulse study revealed that the growth
of salaries in the top IT companies was just 25 percent compared to 64
percent in the previous year. Even the top companies such as Infosys
that were not significantly affected by the appreciation of rupee in the
first quarter of fiscal year 2007 felt the pinch in the second quarter.
In addition to forcing the companies to reduce their employee-related
expenditure, the rise in rupee value had also resulted in a slowdown in
new recruitments in the sector.
Analysts predicted that the trend of the appreciation of the rupee would
continue and the Indian IT & BPO sector would also grow strong
notwithstanding the US Dollar fluctuations. Analysts such as Alan
Rodger, who is a research analyst with IT research and advisory
organization Butler Group , pointed out that the high quality of service
and talented workforce available in India together with the continued
improvements to the infrastructure would continue to stand India in good
stead.
However, some analysts were of the view that the salaries in this
sector, which had seen a steep rise in the previous years, would
moderate from the year 2008 with single digit hikes. The rise in rupee
vlaue was challenging IT & BPO sector to have a re-look at their HR
policies and practices and to utilize the resources optimally in order
to withstand this testing time, they said.
Additional Readings and References
1. "BPOs to Bear Brunt of Re Appreciation,",
www.economictimes.indiatimes.com, October 3, 2007.
2. "BPOs to Face Manpower Dearth,", www.myiris.com, October 8, 2007.
3. "Re Rise, Subprime Fiasco to Cut down Q4 Hirings: Survey,"
www.economictimes.indiatimes.com, October 9, 2007.
4. "BPOs Ring in Strategy to Counter Rupee Rise,"
www.economictimes.indiatimes.com, October 11, 2007.
5. "Will Jobs Move Back to Silicon Valley from India? Don't hold your
Breath…," www.knowledge.wharton.upenn.edu, October 18, 2007.
6. "Research Shows Rising Rupee May Hurt Indian Outsourcers,"
www.tmcnet.com, October 19, 2007.
7. "BPOs Lose Sleep over Re Appreciation,"
www.timesofindia.indiatimes.com, October 28, 2007.
8. Sujata Dutta Sachdeva, "Rising Rupee Hits Salaries in IT Sector,"
www.timesofindia.indiatimes.com, November 22, 2007.
9. Kushal Shah, "Climbing the Offshoring Leader,"
www.expresscomputeronline.com.
Cases on related topics
1.
Some HR Dilemmas in Information Technology and Business Process
Outsourcing Firms
2.2. The Appreciation of the Rupee
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