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INDIA: India's technology hub Bangalore has been hard hit by the US downturn.
India's IT sector, once flush with fat salaries and an expanding workforce, is now facing wage cuts and layoffs.
The rising Indian rupee and the slowing US economy are forcing firms to bite the bullet.
Earlier this year, Tata Consultancy Services, India's largest software company, cut performance-linked pay for its workers.
Other companies such as Infosys, Wipro and Satyam are also scaling back.
"Cost cutting should be rational. And instead of firing the employees, it's better to deduct their salaries, but on an equal basis," said the secretary general of Union for IT Enabled Services, Kartik Shekar.
It seems signs of the slowdown have been trickling in since early this year. Between October 2007 and March 2008, the workforce shrank up to 5 per cent. Profits also fell by a similar margin.
However, some experts see a silver lining in the downturn. They say IT firms here should look inwards.
For one, the domestic market has long been overlooked. Also, firms should re-evaluate their dependence on the US, which accounts for more than half of their revenue.
"Here, the IT companies have learnt their lessons and have customers all across the world. If you have a big presence in China that might help, as (the) Chinese economy has not yet felt the impact," said the chairman of CII at Karnataka Council, S Vishwanathan.
IT companies have been raising wages every year by 12 per cent to 15 per cent in order to retain people. But the economic slowdown has added pressure on overall costs.
The global financial crunch may hit next year's IT budgets and lower growth forecast by more than half from its earlier estimates.
- CNA/yt
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