INTRODUCTION TO THE TOPIC

SIGNIFICANCE OF THE STUDY

IT is a very dynamic industry and even after 20 years in India we do not have and standards for salary. The industry is not yet matured. Recruitment is totally depend on the need and if companies want resource then that time they are ready to pay anything just to attract the resource. During recession people with more pay are in problem. Increasing the living standard is easy but coming back is bit tough. IT is the cornerstone of each sphere. Fluctuations are always a part of IT, so the cycle of ups and downs keep on moving. This time IT is in recession mode (due to rupee appreciation) and how it affects the various policies of HR in different sectors (IT sector) is the main significance of my study. As retention is always a challenge for HR managers. This study also lay emphasis on the attrition rate and other factors like salary cut down, hiring and firing etc.

CONCEPTUALIZATION
There are confirmed reports that IT budgets in a number of industries in the US and UK, have been nearly halved. A number of Indians in the US have been sent back, after project cancellations, lay-offs etc. Recent survey from Reuters has also proved the recession that we all are going to witness. The report also says that unlike the previous one, which lasted for just 8 months, this one is expected to last longer. Some people are welcoming this recession. Even though this might appear strange but this is true, as just we are likely to see a price drop here as well. Some services companies are happy for the fact that they have managed to increase their H1B pool, this recession may literally suppress all this happiness straight. As expected, the slowdown in IT has percolated it's way into India and is affecting HR policies It will be interesting to see what strategies our services companies adopt to overcome recession and also stay profitable at the same time. The main concept is to know about various changes in HR policies due to slowdown. In this case we are seeing how HR Policies are affected by slowdown in IT. As SLOWDOWN has not only impacted IT sector only, rather it has affected many other sectors like banking sector, BPOS and other FMCG sector So to show the impact of slowdown on HR, I have taken IT sector And the HR POLICIES include 1.) Hiring and Firing 2.) Salary countdowns 3.) Attrition Rate 4.) Motivational level of employees

FOCUS OF PROBLEM
The main focus of the problem is to know how HR deals with the IT slowdown i.e. during the recession mode is their any change in the HR policies of a company like in recruitment, attrition rate, salary packages, or is this slowdown affecting the motivation level of employees and hence effecting productivity.

OBJECTIVES OF THE STUDY

Main objective: To study the impact of slowdown on HR Policies in IT sector. Other objectives: To know how IT slowdown affects the attrition rate. To know how recession mode in IT create panic among employees due to their salary cut downs. To know about hiring and firing policy during slowdown.

LIMITATIONS OF THE STUDY

Every coins has two sides in the same way while during our project analysis we also come across such things that created problem for us. These are listed below:1. Sample Size: Sometimes sample size taken for the study is not enough to carry out the analysis as the result may not be generalized for the whole population. 2. Time Factor: To carry out the project more time is required so as to gather and compare data from every possible source because of less time the study has a limited scope 3. Geographical area covered in the survey can be limited. 4. Biasness on part of the respondents can be there. Most often respondents show biasness; in this case biasness can be shown on the part that their company HR policies are best in the phase of slowdown. 5. Many respondents wanted an additional aid to fill in response. So the information gathered may include some errors. 6. Most of the IT companies dont like to give their internal data like of salary cut downs, hiring processes etc as this will effect their reputation as their competition in IT.

RESEARCH METHODOLOGY

RESEARCH DESIGN As the study is based on IT so the Analytical method will be best suited for this study. And the impact on HR is to found so for going into the detail of HR Descriptive should be followed. Descriptive and Analytical survey method UNIVERSE The set of objects which has to be clarified before carrying out a study is known as Universe. It may be finite or infinite. In my research universe is finite & it will be in IT INDUSTRY in India SAMPLE This refers to the number of items to be selected from the universe to constitute the sample. Sample:-TCS, HCL, INFOSYS

SAMPLING TECHNIQUE Random Sampling These sampling techniques will be applied to know about the views of different employees simultaneous; it will make the study easier the study is based on different sectors. SAMPLING SIZE- 50 Respondents SAMPLING UNIT- Single unit

COLLECTION OF DATAThe data can be collected by two ways:PRIMARY SOURCE SECONDARY SOURCE PRIMARY DATA The data collected for the first time by the researcher himself is called primary data. There are several methods of collecting primary data like questionnaire, Personal interviews etc. The method adopted for the study will be: Questionnaire Personal interviews e-mails

SECONDARY DATA The data already available is called secondary data. This data may be present in the form of journals, publishings etc. under this report the information will be collected from different sources like: Internet Magazines Newspapers Company bulletins Journals Fact sheet books etc

REVIEW OF EXISTING LITERATURE

SOURCE 1: Article: Recession of The Levator Muscle for Lagophthalmos in Exophthalmic Goiter, By Isidor Goldstein, M.D. The economy and the stock market are closely related. The stock markets reflect the buoyancy of the economy. In the US, a recession is yet to be declared by the Bureau of Economic Analysis, but investors are a worried lot. The Indian stock markets also crashed due to a slowdown in the US economy. The Sensex crashed by nearly 13 per cent in just two trading sessions in January. The markets bounced back after the US Fed cut interest rates. However, stock prices are now at a low ebb in India with little cheer coming to investors. SOURCE 2: The Journal of Business Sequential Signals of Recession and Recovery By Victor Zarnowitz and Geoffrey H. Moore At a time when inflation and rising oil prices are pinching hard, there are me more bad news. Sectors like banking and financial services, IT, BPO, real estate and auto, which usually have highest salary hikes, are going to significantly cut down on increments this year.

SOURCE 3: www.livemint.com/2008/09/12005434/Slowdown-may-impact-hiring-bu.html?pg=1 - 88k SUMMARY: Information technology (IT) firms appear to have lost their appeal at the Indian Institutes of Technology (IIT). Campus recruitment figures by Major Indian and foreign IT firms have dipped this year, raising further concerns of and industry slowdown. Firms like IBM, HCL, Hughes Software and CSC opted out of placements this year and hiring by firms like Indias largest IT services provider Tata Consultancy Service has dropped.

SOURCE 4: news.in.msn.com/business/article.aspx?cp-documentid=1256745 - 53k SUMMARY: Attrition rate has always been a sensitive issue for all organizations. Calculating employee turnover rate is not that simple as it seems to be. No common formula can be used by all the organizations. A formula had to be devised keeping in view the nature of the business and different job functions. Moreover, calculating attrition rate is not only about devising a mathematical formula. It also has to take into account the root of the problem by going back to the hiring stage.

IMPACT OF RECESSION ON HR POLICIES IN IT SECTOR

RECESSION In economics, the term recession generally describes the reduction of a country's gross domestic product (GDP) for at least two quarters. The usual dictionary definition is "a period of reduced economic activity", a business cycle contraction. The United States-based National Bureau of Economic Research (NBER) defines economic recession as: "a significant decline in [the] economic activity spread across the country, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesaleretail sales." In macroeconomics, a recession is a decline in a country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year. Some economists prefer a more robust definition of a 1.5% rise in unemployment within 12 months. In a 1974 New York Times article, Julius Shiskin suggested several rules of thumb to identify a recession, which included two successive quarterly declines in gross domestic product (GDP). His other rules are usually ignored. An alternative, less accepted, definition of recession is a downward trend in the rate of actual GDP growth as promoted by the business-cycle dating committee of the National Bureau of Economic Research[citation needed]. That private organization defines a recession more ambiguously as "a significant decline in economic activity spread across the economy, lasting more than a few months." A recession has many attributes that can occur simultaneously and can include declines in coincident measures of activity such as employment, investment, and corporate profits. A recession is a decrease of less than 10% in a countrys Gross Domestic Product (GDP). The decrease must last for more than one consecutive quarter of a year. The GDP is

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defined as the sum of private spending and government spending on goods, services, labor and investment. The terms recession and depression are often confused. It can be said that a recession is in general not as severe as a depression. A recession tends to resolve more quickly. Not everyone agrees on a specific definition for determining an economic recession, but most can point to several factors, which can cause a recession. Either significant drop in prices, or significant increases in prices can occur. A drop indicates that people may spend less money, thus the GDP is decreased. An increase in price may also reduce both private and public spending and thus decrease the GDP. In some ways, it is quite natural for countries to experience mild recessions. This is a builtin or endogenous factor of a society. Spending and consumption are going to increase and decrease, as will prices. However, another factor besides these occasional built-in drops in spending is needed to evoke a recession. Usually, something changes quickly and provokes sharp increase or decrease in prices. A recent recession in early 2000 was caused by the sudden decrease in activity of the dot.com industry. In the 1990s, the telecom industry had made huge amounts of money and began to overreach its expectations in terms of assessing future demand. Suddenly, the previously looked for demand was much lower than expected, leading to mass layoffs, decrease in production, and thus decrease in spending. The dot.com fall is considered a shock in the GDP, which can fall sharply if the product or industry falls in production and spending. Though the recession resulting from the dot.com bust was considered over by 2003, it has far-reaching consequences that are still felt. Those who initially made excessive amounts of money may still find themselves jobless. Telecom companies significantly cut jobs, and employment rates in the industry have never fully been restored. Telecom companies also cut costs by outsourcing production to foreign countries. While this outsourcing has allowed some companies to continue operations, it left many with training for specific jobs they could no longer perform.

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However, other industries have since expanded and raised the GDP. So the recession is termed over even though many still feel its effects on a personal level. Terming a recession as over does not necessarily account for positive economic changes for the individual. For example, sometimes recession is evaluated in terms of the countrys jobless rate. When this is the case, and people find jobs, failure to evaluate changes in income can make the economy appear more productive than it actually is. A former telecom employee who now works at Wal-Mart may have a job, but this job is not equivalent to former work in compensation. So analysis of only one aspect of a recession should not be used to indicate economic recovery. Recession 2008: Most of the worlds stock markets in late 2007 and early 2008 were touching sky. Even Indian stock market made hay while the sun shone on its horizon. Speculation was rife in many corporate headquarters that, this over exuberance and huge flow of money does not justify stock indices of several countries. There were signals of herd mentality and greed looming all over. Those signals finally came to life in early 2008. It started with IMF prediction of world growth falling to 4.0 percent from 4.9 percent. 4.0 was still a respectable prediction but that announcement was changed just after two months. USA is a dominant force in world economy and as per data it represents 21 percent of the world economy. Changing economic statistics pointed towards a possible USA recession and that signified a global downtrend in economic cycle because of domineering impact of American economy. Many countries, particularly developing ones are heavily dependent on USA and a hint of slowdown in America spelled doom for them. The average spending of American consumers reduced significantly and that resulted in reduced demand for imported items. Oil is extremely important for any country and 2008 witnessed highest ever increase in oil prices. Due to high oil prices, food prices also increased significantly. Crude oil prices rose to $ 147 per barrel from $ 80 per barrel in a span of 6-7 months. That fuelled global inflation to a dangerous mark. 2008 also witnessed unprecedented credit crisis across the world which resulted in closure of several established investment banks.

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Things started getting worst with U.S. sub prime-mortgage market. This induced a tremendous housing market correction of huge implications for pushing up credit costs worldwide. Because of this correction, a good number of Americans, European and Asian banks had to write down billions of dollars in holdings. In fact, few banks filed for bankruptcy and that includes name like Lehman Brothers. It was biggest ever bankruptcy case in US history. More than 81 companies have filed for bankruptcy in USA. Unemployment rate also increased substantially in USA and many people had to leave job. Another 1, 57, 000 jobs were lost in September 2008. Many developed and developing countries are struggling with low GDP and decreasing economic growth. Credit crunch has spread all over the world. However, world over, policy makers are putting in extra liquidity and several other measures to stem the fall but nevertheless, we seem to be going through economic recession.

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IMPACT OF US RECESSION IN INDIA

The ripples of crumbling USA market can be witnessed all over the world. Whatever happens in America, its impact can be felt way beyond the United States. Indian economy is no exception to this rule. World over, companies are biting dust including lions of financial world like, Lehman Brothers, Bear Sterns, AIG, Merill Lynch etc. It has been an unprecedented collapse of financial giants of American economy. The effects of American crisis can be seen in European and Japanese companies. Many banks are almost on the verge of collapse and frantic steps are undertaken by respective governments to prop them up. India, on the other hand, is far more fortunate. Many factors are responsible for relatively less negative impact on Indian economy. The slow pace of financial reforms taking place in India, cautious approach towards permitting foreign investments in Indian business sectors, numerous bureaucratic hurdles and regulatory constraints have turned out to be advantageous for India. India has always been criticized for its slow speed in economic growth but in hindsight its that very turtle speed has proved to be a blessing in disguise. Indian financial system has very little exposure to foreign assets and their derivative products and thats the prime reason India wont be as adversely affected as other major countries. Revival of world economy will take a long time. Though, India will be affected in certain aspects like, low investments by foreign companies. Many FIIs (financial institutional investors) are heavily selling their holdings in numerous Indian companies and that is reflecting in gloom and doom scenario in stock exchange. Apart, companies, mainly IT and ITES companies whose prime business target is USA are bound to suffer. Also, textile companies will find themselves with low top line and bottom-line growth in their balance sheets because of less demand from foreign countries and consequently less revenue from exports.

Another impact would be seen in financial reforms taking place in India. Indias cautious approach towards integrating with world economy has paid off and now even more caution
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would be taken in de-regularization of the financial sector considering conditions of market based economies. More regulations are expected to come into force so that India does not have to face similar worst conditions as faced by ASEAN counties in 1997-98 crisis and recession of 2008

In other words, the effects of this recession on India may be quite distinct from those of the past. Here are some areas worth following: 1. A credit crisis in the United States might lead to a restructuring of asset allocation at pension funds. It has been suggested that CalPERS is likely to shift an additional US$24 billion to its international portfolio. A large portion of this is likely to flow into India and China. If other funds follow suit, a cascading effect can be expected. Along with the already significant dollar funds available, the additional funds could be deployed to create infrastructure--roads, airports, and seaports--and be ready for a rapid takeoff when normalcy is restored. 2. In terms of specific sectors, the IT Enabled Services sector may be hit since a majority of Indian IT firms derive 75% or more of their revenues from the United States--a classic case of having put all eggs in one basket. If Fortune 500 companies slash their IT budgets, Indian firms could be adversely affected. Instead of looking at the scenario as a threat, the sector would do well to focus on product innovation (as opposed to merely providing services). If this is done, India can emerge as a major player in the IT products category as well. 3. The manufacturing sector has to ramp up scale economies, and improve productivity and operational efficiency, thus lowering prices, if it wishes to offset the loss of revenue from a possible US recession. The demand for appliances, consumer electronics, apparel, and a host of products is huge and can be exploited to advantage by adopting appropriate pricing strategies. Although unlikely, a prolonged recession might see the emergence of new regional groupings--India, China, and Korea?

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4. The tourism sector could be affected. Now is the time to aggressively promote health tourism. Given the availability of talented professionals, and with a distinct cost advantage, India can be the destination of choice for health tourism. 5. A recession in the United States may see the loss of some jobs in India. The concept of Social Security, that has been absent until now, may gain momentum. 6. The Indian Rupee has appreciated in relation to the US dollar. Exporters are pushing for government intervention and rate cuts. What is conveniently forgotten in this debate is that a stronger Rupee would reduce the import bill, and narrow the overall trade deficit. The Indian central bank (Reserve Bank of India) can intervene anytime and cut interest rates, increasing liquidity in the economy, and catalyzing domestic demand. A strong domestic demand would also help in competing globally when the recession is over. In summary, at the macro-level, a recession in the US may bring down GDP growth, but not by much. At the micro-level, specific sectors could be affected. Innovation now may prove to be the engine for growth when the next boom occurs. For US firms, who have long looked at China as a better investment destination, this may be a good time to look at India as well. After all, 350 million people with purchasing power cannot be ignored. This is not a sales pitch for India, but only a gentle suggestion to US corporations.

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STRATEGIC ROLE OF HR DURING RECESSION

The recession is an opportunity for HR professionals to step and contribute strategically. In the classical strategy paradigm, we begin by looking at the macro economic environment. Then we look at the micro-environment - what affects us and our competitors. Next, we establish which strategic factors HR influences directly. Finally, we drop down to our tacticsThe recession is about the creative Human Resources Management. The HRM Function is asked to bring new ideas, to change the HRM Processes and to develop or change the procedures. And this effort has to be cheap or it has to cut the costs of the organization. The HRM Innovation is easy in times of the business growth, but the recession is not good for big innovative HRM Initiatives. The HR Management has to focus on unpopular innovations during the recession as the role of HR during the recession is to save money to the organization. The senior management expects all the support functions to bring innovative ideas and solutions which will lead to stronger organization, when the next growth era comes. The point has to be focused by HR management during recession are as follows:

To optimize the manpower strength. To take strategic initiatives to increase the productivity and efficiency of To work on compensation benefits. Redesign training and development programs. Ensure your organizations policies and handbooks are up to date.

the entire organization.

Remember that an annual review of your employee handbook for compliance by an experienced professional is highly recommended. Also, each employee having a copy of the employee handbook is not enough. They have to be able to read and understand the content. Be sure that you provide employees a handbook in a language they can read and understand.

Layoffs are never easy. Ensure you are familiar with your legal

responsibilities in a lay off to minimize your organization's risk. Be sure that you have properly defined the criteria you are using to determine who will be let go.

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Alternative Workweek Schedules and Flexible Scheduling can maximize

production and cut-back on overhead costs for organizations. Be sure you follow all of the DLSE rules when deciding if an Alternative Workweek Schedule or Flexible Scheduling is right for your organization.

Cutting Pay may be an option to consider to save on todays costs. Is this

really an option for your organization? How are your pay scales as related to the market? Are you willing to risk losing key employees whose talents may be needed by other organizations, because you chose to reduce their pay at this time? Remember, you should not cut pay without a recovering strategy of how you will re-adjust when the economy has turned.

Downsizing does require internal document maintenance for your

organization. As jobs are modified and responsibilities are increased changes also must be made to your job descriptions.

On the other hand the HR Management has to find some innovative To identify the real key employees and to intact them in the organization To identify the real top potentials and to strengthen their development

solutions during the recession like,

program The HR Management has to have priorities in mind and the strategic impact of the HRM Innovations in the recession time. The role of the HR Management is not to minimize the costs for the time being, but to make the organization stronger and ready for the future growth. Recommendations while your employer facing negative challenges during recession: 1. Top management should know the contingency plan. 2. Do the brainstorming session with your top management and contribute in their strategic planning. 3. A complete or partial job freeze, however, communicate to the workforce that the company many continue to recruit key individuals even in difficult times 4. Review the employee performance evaluations to determine the key people that company cannot afford to lose.

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5. Flow of Communicate should be from top to down that will help in making conducive atmosphere within the organization 6. Make prepare yourself for individual and group concerns therefore there should be a proper counseling session. 7. To maintain a calm atmosphere 8. Review all HR policies, processes and procedures to ensure that they are purposeful and contribute directly to the success of the company. 9. Suppose the company has to lay-off staffs ensure that there are no other opportunities for them in other functions or divisions of the organization. 10. Advise managers to deal the process of managing change. Managing Human Resources (HR) in a difficult economic environment is even more demanding than working in times of rapid growth. Therefore the task of HR is very important to maintain equilibrium throughout the hierarchy.

How to intact your employee during recession: Here is how to keep your employees with you and away from your competitors during tough economic times. Differentiate Between Your Good and Average Employees Redirect Your Employees to Other Departments (Job Rotation) Listen to Your Employees Keep Them Motivated and Busy (Communicate-Communicate and Communicate) Show them the long term vision The above steps will enable the employer to hold its team together during a recession, and will even make bond between all of you stronger. Employees should be motivated enough to stick to the employer during tough times and put in the extra effort required for the organization growth.

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HRM Innovations in Recession

The recession is about the creative Human Resources Management. The HRM Function is asked to bring new ideas, to change the HRM Processes and to develop or change the procedures. And this effort has to be cheap or it has to cut the costs of the organization. The HRM Innovation is easy in times of the business growth, but the recession is not good for big innovative HRM Initiatives. On the other hand, the top management understands the effort to innovate the HRM Processes better. The top management is in the search for the potential cost savings and they count every single penny brought by the line management. The HRM Costs are usually a very significant cost to the organization and the HRM Function has to be proactive. The HRM Function has to focus on unpopular innovations during the recession as the role of Human Resources during the recession is to save money to the organization. The top management expects all the support functions to bring innovative solutions, which will have to make the organization stronger, when the next growth era comes. The HRM Innovation during the recession has to focus on the following topics: 1. Reduce the number of employees in the organization 2. Strategic initiatives to increase the productivity and efficiency of the whole organization 3. Redesign of the compensation scheme 4. Cancellation of several benefit schemes On the other hand the HRM Function has to find innovative solutions for the following topics: 1. Identifying the real key employees and to keep them in the organization 2. Identifying the real top potentials and to strengthen their development program

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The second two topics have to be done with the minimum additional costs and it is a really hard task to accomplish. The HRM Function has to have priorities in mind and the strategic impact of the HRM Innovations in the recession time. The role of the HRM Function is not to cut the costs for the time being, but to make the organization stronger and ready for the future growth. As a leader and strategic partner in your organization, you have the tools to assist your company in surviving and thriving through these difficult times. First you need to start thinking strategically How can the organization make effective and economical changes that will help through these difficult times? What can I do to minimize our organizations risk for fines, violations and/or unnecessary legal proceedings? Following area should be looked upon:

Ensure your organizations policies and handbooks are up to date. Remember that an annual review of your employee handbook for compliance by an experienced professional is highly recommended. Also, each employee having a copy of the employee handbook is not enough. They have to be able to read and understand the content. Be sure that you provide employees a handbook in a language they can read and understand.

Layoffs are never easy. Ensure you are familiar with your legal responsibilities in a lay off to minimize your organization's risk. Be sure that you have properly defined the criteria you are using to determine who will be let go.

Alternative Workweek Schedules and Flexible Scheduling can maximize production and cut-back on overhead costs for organizations

Cutting Pay may be an option to consider saving on todays costs. Is this really an option for your organization? How are your pay scales as related to the market? Are you willing to risk losing key employees whose talents may be needed by other organizations, because you chose to reduce their pay at this time? Remember, you should not cut pay without a recovering strategy of how you will re-adjust when the economy has turned.

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Offer Professional Development as a reward or incentive to employees for performance and hitting goals. Professional Development courses are an economical way to reward employees with the gift of education and skills they will use throughout their lifetime.

Downsizing does require internal document maintenance for your organization. As jobs are modified and responsibilities are increased changes also must be made to your job descriptions.

Remember that the law is very specific on what positions can be considered Salaried Exempt and what constitutes an Independent Contractor. Looking at adjusting your staff to fit into one of these two categories is NEVER the answer when trying to save money.

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Impact of Recession on HR Policies

Recruitment Recruitment refers to the process of screening, and selecting qualifed people for a job at an organization or firm, or for a vacancy in a volunteer-based organization or community group. While generalist managers or administrators can undertake some components of the recruitment process, mid- and large-size organizations and companies often retain professional recruiters or outsource some of the process to recruitment agencies. External recruitment is the process of attracting and selecting employees from outside the organization. The recruitment industry has four main types of agencies: employment agencies, recruitment websites and job search engines, "headhunters" for executive and professional recruitment, and in-house recruitment. The stages in recruitment include sourcing candidates by advertising or other methods, and screening and selecting potential candidates using tests or interviews.

Impact of Recession on Recruitment Organisations respond to tough times in different ways, but we have seen clear impact on teams as follows (not exhaustive): A deliberate dismantling of teams and hierarchies An overall reduction of cost base, requiring (unspecified) cuts measured in percentages Movement of headcount to suppliers (outsourcing) Movement of headcount to cheaper locations (off-shore or in-shore) Realignment of staff to profit centres Information Professionals encouraged to become para-consultants/ fee-earners

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A reduction in headcount, but an elevated expectation of performance fewer heads but more expert Roles become multi-faceted; step change from service delivery to solutions/advisory roles Restructuring to either centralise, to reduce costs, or de-centralise to take out overheads Absolute redundancy; when firms enter procedures for administration or liquidation (rare)

In the last recession (2001/2), there were two main factors at play; a correction in the capital markets (dot.com bust), and the impact of the terrorist activity, 9/11 and worldwide, affecting confidence. The capital markets downturn impacted profits and the level of transactions, affecting all organisations in the City, directly or indirectly. Markets are quick to react, so after 9/11, there was a hiatus in recruitment until business resumed some sort of normality redundancies occurred; a reduction and redeployment of headcount and then a re-shaping of research/information knowledge services across the board. Many of the companies who had invested in setting up a knowledge-based infrastructure used this time to dismantle the teams who had worked on the first iterations of database building, information gathering, coding and training, to replace them (foundations successfully laid) with professionals able to perform strategic research and focus on feesupporting activities.

Retrenchment Retrenchment is something akin to downsizing. When a company or government goes through retrenchment, it reduces outgoing money or expenditures or redirects focus in an attempt to become more financially solvent. Many companies that are being pressured by stockholders or have had flagging profit reports may resort to retrenchment to shore up their operations and make them more profitable. Although retrenchment is most often used in countries throughout the world to refer to layoffs, it can also label the more general tactic of cutting back and downsizing.

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Companies can employ this tactic in two different ways. One way is to slash expenditures by laying off employees, closing superfluous offices or branches, reducing benefits such as medical coverage or retirement plans, freezing hiring or salaries, or even cutting salaries. There are numerous other ways in which a company can employ retrenchment. These can be non-employee related, such as reducing the quality of the materials used in a product, streamlining the process in which a product is manufactured or produced, or moving headquarters to a location where operating costs are lower.

Impact of Recession on Retrenchment The financial slow in economic market and US's attempt to get market back on track with its $700 billion bailout package, things can get better. But what is the impact of US recession on Indian IT? The article is just a sneak preview of what is currently going with IT segment in the country: India, a hot destination for outsourcing and booming market for IT segment is making global imprints. With its distinguished workforce and talented human power it is spearheading to global expansion. Undoubtedly, India is riding on the back of considerable growth of IT and ITeS segment which is the major reason for high GDP growth from past few years. But, the so far well doing sector seems badly influenced by the US economic crunch. US is in slumping stage as concluded last year, but initially it was expected that it will not hit Indian IT at high node as Indian companies are more dependant on domestic market. Considering last year's scenario, our 13% goods were sold in overseas market thus increasing the FDI. This indicates that our dependancy on foreign markets is increasing. Nevertheless, it is coming true as of now factually Indian economy is also facing the blues. US is the major market for Indian outsourcers and around 60% of software industry is based on the project being outsourced from that end. With US, facing high economic downturn, Indian software industry is on the reality check; what is stored for them in this economic slump. Barring some top shots, it seems whole IT

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industry is crippling with projects ended and future deals in abeyance. The companies are facing the billing pressure indicating that meltdown is cracking the backbone of strong Indian GDP growth and aim of being reckoned as global power in coming few years.

The Attrition Rate The attrition rate has always been a sensitive issue for all organizations. Calculating employee turnover rate is not that simple as it seems to be. No common formula can be used by all the organizations. A formula had to be devised keeping in view the nature of the business and different job functions. Moreover, calculating attrition rate is not only about devising a mathematical formula. It also has to take into account the root of the problem by going back to the hiring stage. Attrition rate: There is no standard formula to calculate the attrition rate of a company. This is because of certain factors as: The employee base changes each month. So if a company has 1,000 employees in April 2004 and 2,000 in March 2005, then they may take their base as 2,000 or as 1,500 (average for the year). If the number of employees who left is 300, then the attrition figure could be 15 percent or 20 percent depending on what base you take. Many firms may not include attrition of freshers who leave because of higher studies or within three months of joining. In some cases, attrition of poor performers may also not be treated as attrition. Calculating attrition rate: Attrition rates can be calculated using a simple formula: = (No. of employees who left in the year / average employees in the year) x 100

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Impact of Recession on Attrition Rate IT Sector is being looked upon as the next big employment generator (Nasscom predicts 1.1 million job requirement by the year 2008). It is however no easy task for an HR manager in this sector to bridge the ever increasing demand and supply gap of professionals. Unlike his software industry counterpart, the HR manager is not only required to fulfill this responsibility, but also find the right kind of people who can keep pace with the unique work patterns in this industry. Adding to this is the issue of maintaining consistency in performance and keeping the motivation levels high, despite the monotonous work. The toughest concern for an HR manager is however the high attrition rate. In India, the average attrition rate in the IT sector is approximately 30-35 percent. It is true that this is far less than the prevalent attrition rate in the US market (around 70 percent), but the challenge continues to be greater considering the recent growth of the industry in the country. The US IT sector is estimated to be somewhere around three decades old. Keeping low attrition levels is a major challenge as the demand outstrips the supply of good agents by a big margin. Further, the salary growth plan for each employee is not well defined. All this only encourages poaching by other companies who can offer a higher salary.

Motivation Motivation has been defined as: the psychological process that gives behavior purpose and direction (Kreitner, 1995); a predisposition to behave in a purposive manner to achieve specific, unmet needs (Buford, Bedeian, & Lindner, 1995); an internal drive to satisfy an unsatisfied need (Higgins, 1994); and the will to achieve (Bedeian, 1993). For this paper, motivation is operationally defined as the inner force that drives individuals to accomplish personal and organizational goals.

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Impact of Recession on Motivation level of Employee Motivation level of employees has been affected by various factors: Salary cut downs Firing policies Various cut down of allowances.

The IT sector will be the worst hit as 75 per cent of its revenues come from the US. Low demand for services may force most Indian Fortune 500 companies to slash their IT budgets. The status of Employment in all IT sectors is fine for the moment, but in coming future it will have a heavy impact on them, Job cuts, cuts in salaries will create havoc. Worst affected because of US recession will be the service industry of India. Under service industries come BPO, KPO, IT, ITeS etc. Service industry contributes about 52% to India's GDP growth. Now if that is going to get hurt then it will also hurt India's overall growth but very slightly. India is not going to face a major impact due to US recession. People may say that there is going to be a huge job loss due to recession. and will cite the example of TCS firing about 500 employees but these were employees who didnt perform and for cost cutting one have to reduce Non performing asset and that exactly what has been done. There is no threat to the skilled people. According to NASSCOM India will have a shortage of about 5 million skilled people in IT/ITeS. So there are lots of opportunities. The Indian IT industry will take a very big hit as their bottom line earnings will go down since major market in IT still remains the USA and there is a lot of dependence on the market .This would mean there would be the following impact 1. Employment rate will slow down and there could be a situation where fore cast hiring would virtually be stopped 2. The ITES sector will be hit under the belt as the low cost destination factor will no longer seem very attractive and there could be very drastic slow down in business in this sector
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3. Call centers however will continue to thrive 4. The pay package in these industries will also take a hit with no increments and salary cuts

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IT Strategies for a Recession

When economic times get tough, it's necessary for small and medium-size businesses to reevaluate the budget and in some cases tighten the proverbial belt. Most importantly it means thinking strategically about how best to spend, and save, in a recession. Your information technology department is a good place to start Doing this means taking a comprehensive view of organizational expenses and prioritizing. Understanding which technology investments help to increase productivity and better serve clients is the first step. Continuing to fund these strategic technologies during an economic downturn is very important. With a recession technology plan in place, your organization can survive, and even thrive, within this turbulent economy. Here are three steps to take when putting together your IT strategy for the slowing economy.

Step 1: Reevaluate Your Needs Treat recession planning like budget planning. Changing economic conditions require a change in thinking. Just as you reevaluate your expenses from the previous year when planning for a new fiscal year, you need to reevaluate your current operating budget during a recession. Ask yourself the following questions:

What technology must be maintained or implemented that makes you

indispensable to your customers or members? Your target markets will be feeling the recession too; you want to make sure their relationship with your organization continues by providing efficient, affordable, and high-shelf service.

Do you have technology in place that is instrumental in helping you attract

new customers and retain current ones? Your bottom line is key in a recession. Since any additions will greatly impact the bottom line, consider maintaining technology that supports customer retention throughout the economic downturn.

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Is your current method of technology and network support working for you?

Is it cost-effective? Efficient? If not, it may be time to consider other options. Rebalance technology investments by looking at the comprehensive picture. Dont focus on shutting them down; focus on making strategic IT investments.

Step 2: Stretch Your IT Dollars If yours is like most organizations, it needs to make budgeted IT dollars go further. Here are a few ways:

Save on upgrades: Wait to make any noncritical upgrades until after the

recession is over.

Stretch equipment life cycles: Workstations usually have a three-year life cycle.

During a recession it is OK to stretch this to four years, though you may want to consider minor upgrades such as increasing RAM.

Review software licensing and support agreements: As part of your

reevaluation, you should take time to review all of your organizations software licensing and support agreements to make sure you are not paying for duplicate coverage.

Step 3: Spend Smart In a recession, organizations often panic and tighten their belts to the point of passing out; and then they are down for the count. So whatever your IT strategy for dealing with an economic downturn, dont be cheap. Good spending does exist and it comes in the form of IT investments that will add to your organizations security and productivity. Here are five IT investments you should consider, even during a recession:

Security investments: Protect your company with firewalls, Microsoft patching,

antivirus and spyware protection, and so forth. It's critical to maintain all services that

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are protecting your network and keeping your systems up and running because no organization can afford a loss in productivity, especially during a recession.

Warranties: If you are stretching the lifetime of your hardware, you should not

skimp on hardware maintenance. Be sure to extend your warranties.

Proactive IT service: Without proactive monitoring, problems are much more

likely. This is even more important during a recession because calling your IT service provider only when something goes wrong incurs much higher service costs.

Backup and disaster recovery mechanisms: Ensure your backup and disaster

recovery systems are working well. You dont want operations to stop during a recession should something happen with your front-line business applications.

Line of business applications: For all businesses, this means continuing to

support technologies such as time and billing software that make the operation more efficient. Continued productivity is key in slow economies. Condition of IT Industry before recession

Condition of IT Industry after recession

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Fact of TCS Overview: Tata Consultancy Services Limited is an IT services, business solutions and outsourcing organization that delivers real results to global businesses, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT and ITenabled services delivered through its unique Global Network Delivery Model, recognized as the benchmark of excellence in software development. A part of the Tata Group, Indias largest industrial conglomerate, TCS has over 130,000 of the world's best trained IT consultants in 42 countries. The company generated consolidated revenues of US $5.7 billion for fiscal year ended 31 March 2008 and is listed on the National Stock Exchange and Bombay Stock Exchange in India. Revenues: US$ 5.7 billion (12 months. ended Mar. 31, 2008) Profits after tax: US$ 1,251.51 million (12 months. ended Mar. 31, 2008) Market Capitalization: US$ 9.41 billion (as on December 31, 2008). Ticker/ Exchange: TCS.BO (Bombay Stock Exchange) TCS. NI (National Stock Exchange, Mumbai) HIGHLIGHTS AND DIFFERENTIATORS

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Integrated full-services player: Portfolio of offerings extends from consulting to

implementation, testing and support; from engineering services to BPO; from products to end-to-end solutions Global Network Delivery Model: Unique network of 79 Delivery Centers in Brazil, Uruguay, Chile, China, Hungary, UK, Japan, Australia, Singapore and India that operate at the same quality, security and skill levels, giving customers the same experience of certainty across the organization globally High Quality and Maximum security: In 2005, TCS was awarded enterprise-wide Quality (ISO 9001:2000) Security (ISO 27001-2:2005) Services (ISO 20000-1:2005) Innovation network of 20 labs and strong links with start-ups, academia and alliance partners Superior Customer Base:

triple certification for:

TCS customers span different industries and have operations spread across the More than 95% of revenues come from existing customers and 6 of our top 10 Six of the Top 10 Fortune-500 US Companies are TCS customers as are 49 of the Total number of active customers: 965 Percentage of revenues from Top 10 customers: 26.3

world customers have been TCS customers for over 5 years Top 100 Fortune-500 US Companies

World-class Talent Management Program 130,343 Employees worldwide (average age: 28 years) 9.1 % employees are non-Indian nationals from 67 nationalities 15. 3% are Masters and 0.10% are Phds. 52% have more than 3 years experience Attrition rate: 11.9 (last 12 months) 30% Women Employees

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Extensive Global Footprint: 142 offices in 42 countries. Revenues by Geography in % (Quarter ended December 31, 2008):

North America Ibero America UK Continental Europe India Asia Pacific Middle East and Africa

52.2 5.1 18.5 10.7 6.8 5.0 1.7

Industry Presence: Unmatched Breadth and Depth Our model of domain-led solutions is focused around nine industry practices that bring indepth global knowledge of these industries for our customers, extend best-practices across markets and help us create business solutions for customers that also take account of their business, regulatory and market needs. Revenues by Industry vertical:

Banking, Financial Services & Insurance Telecom Manufacturing Retail & Distribution Hi- Tech Life Sciences and Healthcare Travel & Hospitality Energy and Utilities Media & Entertainment Others

41.9 13.8 10.6 11.2 6.7 5.2 3.7 2.6 2.0 2.3

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Integrated Full Services Portfolio: Our Services capture the entire chain of a customers technology requirements from consulting through to implementation, testing to support. We also provide BPO, engineering, infrastructure services as well as solutions and products, primarily in the financial services space. The number of customers using multiple TCS services is increasing with 320 international customers now using at least two or more TCS services. IT Solutions and Services - Application Development and Maintenance - Business Intelligence - Enterprise Solutions - Assurance Services Engineering & Industrial Services Infrastructure Services Global Consulting Asset Leveraged Solutions BPO

49.0 8.1 12.6 4.2 6.3 8.3 2.5 3.2 5.8

Fact Sheet of Infosys Infosys Technologies Ltd. (NASDAQ: INFY) was started in 1981 by seven people with US$ 250. Today, we are a global leader in the "next generation" of IT and consulting with revenues of over US$ 4 billion. Infosys defines, designs and delivers technology-enabled business solutions that help Global 2000 companies win in a Flat World. Infosys also provides a complete range of services by leveraging our domain and business expertise and strategic alliances with leading technology providers. Revenues: US$ 4 billion (12 months. ended Mar. 31, 2008) Profits after tax: US$ 1,301.51 million (12 months. ended Mar. 31, 2008) Market Capitalization: US$ 7.21 billion (as on December 31, 2008). HIGHLIGHTS AND DIFFERENTIATORS

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Infosys' service offerings span business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, reengineering, independent testing and validation services, IT infrastructure services and business process outsourcing Infosys has a global footprint with over 50 offices and development centers in India, China, Australia, the Czech Republic, Poland, the UK, Canada and Japan Superior Customer Base: Infosys takes pride in building strategic long-term client relationships INFOSYS customers span different industries and have operations spread across the More than 97% of revenues come from existing customers

world Infosys selected as a member of The Global Dow Infosys Technologies is now an original component member of 'The Global Dow' - a new stock index of 150 leading blue-chip stocks from around the world. World-class Talent Management Program 115,240 Employees worldwide (average age: 28 years) 9.1 % employees are non-Indian nationals from 67 nationalities 13. 3% are Masters and 0.10% are Phds. 48% have more than 3 years experience Attrition rate: 12.1 (last 12 months) 42% Women Employees

DATA ANALYSIS AND INTERPRETATION

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Q1. Do you understand about recession?

Particular Yes No

Percentage 90% 10%

90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

Yes

no

INTERPRETATION According to 90% respondents says that they are understand about recession and other 10% respondents says that they are not understand about recession.

Q2. Is recession affecting the IT Industry?

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Particular Yes No

Percentage 85% 15%

90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

Yes

no

INTERPRETATION

According to 85% respondents says that recession is affecting the IT Industry and other 15% respondents says that recession is not affecting the IT Industry.

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Q3. Is recession having any impact on HR policies of your company?

Particular Yes No

Percentage 60% 40%

60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Yes no

INTERPRETATION According to 60% respondents says that recession have impact on HR policies of company and other 40% respondents says that recession have not impact on HR policies of company.

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Q4. Which HR policy is having worst impact due to recession of your company? Particular Recruitment Retrenchment Attrition Rate Salary cut downs Percentage 20% 30% 15% 35%

35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Recruitment Retrenchment Attrition rate Salary cut downs

INTERPRETATION According to 20% respondents says that Recruitment is the HR policy having worst impact due to recession, 30% respondents says that Retrenchment is the HR policy having worst impact due to recession, 15% respondents says that Attrition is the HR policy having worst impact due to recession and other 35% respondents says that Salary Cut downs is the HR policy having worst impact due to recession.

Q5. Do you feel that recession is only for private employees in India?
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Particular Yes No

Percentage 95% 5%

100.00% 80.00% 60.00% 40.00% 20.00% 0.00% Yes no

INTERPRETATION According to 95% respondents says that recession is only for private employees in India and other 5% respondents says that recession is not only for private employees in India.

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Q6. Are you satisfied with the salaries and remuneration given to you during this recession period?

Particular Yes No

Percentage 82% 18%

90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

Yes

no

INTERPRETATION According to 82% respondents says that they are satisfied with the salaries and remuneration given the period of recession and other 18% respondents says that they are not satisfied with the salaries and remuneration given the period of recession.

Q7. Do you feel that the attrition rate has really slowed down due to recession?

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Particular Yes No

Percentage 87% 13%

90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

Yes

no

INTERPRETATION According to 87% respondents says that they are feel that the attrition rate has really slowed down due to recession and other 13% respondents says that they are not feel that the attrition rate has really slowed down due to recession.

Q8. Is recession really closing doors of IT professionals?

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Particular Yes No

Percentage 88% 12%

90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

Yes

no

INTERPRETATION According to 88% respondents says that recession really closing doors of It professionals and other 12% respondents says that recession not really closing doors of It professionals.

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Q9. According to you in how much time the market will recover? Particular In Six Months In One Year In 1 Year In Two Years Percentage 12% 28% 35% 25%

40% 35% 30% 25% 20% 15% 10% 5% 0% In Six Months In One Year In One & half Year In two Years

Series1

INTERPRETATION According to 12% respondents says that in six months time the market will recover, 28% respondents says that in one year time the market will recover, 35% respondents says that in one & half year time the market will recover and other 25% respondents says that in two years time the market will recover.

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Q10. Is your company taking any measures to overcome this recession?

Particular Yes No

Percentage 75% 25%

80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Yes no

INTERPRETATION According to 75% respondents says that they are taking any measures to overcome this recession and other 25% respondents says that they are not taking any measures to overcome this recession.

SUGGESTION AND RECOMMENDATION

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Recommendations while your employer facing negative challenges during recession: 1. Top management should know the contingency plan.

2. Do the brainstorming session with your top management and contribute in their strategic planning. 3. A complete or partial job freeze, however, communicate to the workforce that the company many continue to recruit key individuals even in difficult times 4. Review the employee performance evaluations to determine the key people that company cannot afford to lose. 5. Flow of Communicate should be from top to down that will help in making conducive atmosphere within the organization 6. Make prepare yourself for individual and group concerns therefore there should be a proper counseling session. 7. To maintain a calm atmosphere

8. Review all HR policies, processes and procedures to ensure that they are purposeful and contribute directly to the success of the company. 9. Suppose the company has to lay-off staffs ensure that there are no other opportunities for them in other functions or divisions of the organization. 10. Advise managers to deal the process of managing change.

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CONCLUSION
Recession will have its plus point and minus points. The minus points are that, there will be job scarcity; retrenchment will be all time high, liquidity in the market will be low; export market will be severely hit etc etc. The plus point is that cost of living will come down. Things we were exporting will be forced to be sold locally, bringing the price of products down. Real estate which was out of reach for the common man, will be within his reach. As sales revenues and profits decline, the manufacturer will cut back on hiring new employees, or freeze hiring entirely. In an effort to cut costs and improve the bottom line, the manufacturer may stop buying new equipment, curtail research and development and stop new product rollouts (a factor in the growth of revenue and market share). Expenditures for marketing and advertising may also be reduced. These cost-cutting efforts will impact other businesses, both big and small, which provide the goods and services used by the big manufacturer. Employee Lay-offs and Benefit Reductions The business may cut employees, and more work will have to be done by fewer people. Productivity per employee may increase, but morale may suffer as hours become longer, work becomes harder, wage increases are stopped and fear of further layoffs persists. (Read about how employment statistics influence corporate confidence in Surveying The Employment Report.) As the recession increases in severity and length, management and labor may meet and agree to mutual concessions, both to save the company and to save jobs. The concessions may include wage reductions and reduced benefits. If the company is a manufacturer, it may be forced to close plants and discontinue poorly performing brands. Automobile manufacturers, for example, have done this in previous recessions.

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Cuts to Quality of Goods and Services Secondary aspects of the goods and services produced by the recession-impacted manufacturer may also suffer. In an attempt to further cut costs to improve its bottom line, the company may compromise the quality, and thus the desirability, of its products. This may manifest itself in a variety of ways and is a common reaction of many big businesses in a steep recession.

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QUESTIONNAIRE
Name : ________________________________ Age Sex Address Phone no. Instructions: Tick in the appropriate column. The information provided by you is confidential and is used only for : ________________________________ : ________________________________ : ________________________________ : _________________________________

academic purpose. Q1. Do you understand about recession? Yes ( ) Q2. Is recession affecting the IT Industry? Yes ( ) No ( ) No ( )

Q3. Is recession having any impact on HR policies of your company? Yes ( ) No ( )

Q4. Which HR policy is having worst impact due to recession of your company? Recruitment ( ) Attrition Rate ( ) Retrenchment ( ) Salary cut downs ( )

Q5. Do you feel that recession is only for private employees in India? Yes ( ) No ( )

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Q6. Are you satisfied with the salaries and remuneration given to you during this recession period? Yes ( ) No ( )

Q7. Do you feel that the attrition rate has really slowed down due to recession? Yes ( ) Q8. Is recession really closing doors of It professionals? Yes ( ) No ( ) No ( )

Q9. According to you in how much time the market will recover? In Six Months In 1/ Year In One Year In two years

Q10. Is your company taking any measures to overcome this recession? Yes ( ) No ( )

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BIBLIOGRAPHY

Bernadin H.John,(2003); Human Resource Management, Tata McGraw Hill, New Delhi Raymond A. Noe. Et al (2003); Human Resource Management, Tata McGraw Hill, New Delhi Mamoria C.B., S.V. Gankar, Personnel Management, Sultan Chand and Sons Arthur Diane, Recruiting, Intervening and orienting new employees, Prentice Hall of India Pvt. Ltd.

Web Sites Searched 1. www.livemint.com/2008/09/12005434/Slowdown-may-impact-hiring-bu.html? pg=1 - 88k 2. www.cipd.co.uk/podcasts/_articles/hr-trends-episode-15.htm?view=transcript 39k 3. news.in.msn.com/business/article.aspx?cp-documentid=1256745 - 53 -

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