In an indication that the global layoff wave has hit the Indian shores, global financial services major Citigroup believes that jobless numbers in the country could climb in the coming months.
According to a latest report by Citigroup, the country does not appear to have remain unscathed from the massive layoffs witnessed worldwide and unemployment could rise further with home coming of migrant workers.
India’s unemployment rate is officially at 8.2% but the point worth noticing is that disguised employment exists in developing economies, the report also said.
The global meltdown and the consequent slowdown in the Indian economy took 5 lakh [500,000] workers off factory floors in the last three months of 2008, the labor bureau announced today after a study that covered 2,581 units.
The study reveals that between October and December last year, 5 lakh workers have lost jobs in sectors like textile and garment, metals and metal products, automobiles, gems and jewelery, transportation, construction and mining industries.
However, according to the study, IT and BPO increased employment rate marginally by 0.33 per cent, which does not match popular perception. As the entire sample covered 2,581 units, the number of IT companies could not have been too high and the finding is unlikely to mirror the full picture.
Indian exporters have shed as many as 1 million jobs, more than 15 times a December estimate, amid the most protracted decline in overseas sales in a decade, the commerce ministry said.
“The job losses are very substantial and are likely to be of the order of 700,000 to 1 million, including temporary staff,” Commerce Secretary G.K. Pillai told Bloomberg News in an interview in New Delhi yesterday. Exports fell 1 percent in December and any recovery “is likely only by June,” he said.
Indian exporters may fire as many as 10 million workers, a lobby group said, putting pressure on Prime Minister Manmohan Singh to cut taxes and protect the industry from the global recession.
The estimate by the Federation of Indian Export Organizations represent about 7 percent of those involved in overseas sales and about 20 times the Nov. 21 government estimate for job losses. The exporters don’t have orders beyond this month, A. Sakthivel, the lobby group’s president, told reporters today in New Delhi.
The Union of Information Technology Enabled Services (UNITES) Professionals, India anticipates at least 50,000 job losses in the first half of the new year, owing to the global recession.
UNITES general secretary, Karthik Shekhar, a computer engineer, formerly with International Business Machines (IBM), says the prediction of another 50,000 job losses has been estimated from the uncertainty of U.S. president-elect Barack Obama’s new policy on outsourcing, the bail packages by the British government and financial institutions which may result in conditions being imposed on local jobs.
[I]ndustry’s economic links to the U.S. and Britain’s recessions have played havoc on the local scene, with at least 10,000 jobs in the industry being lost between September 2008 and December 2008. Others, mostly junior level executives, have taken salary cuts ranging from 25 percent to as high as 75 percent.
According to Bloomberg: “Satyam Computer Services Ltd. chairman Ramalinga Raju and his brother Rama were arrested and the remaining directors of the software exporter sacked, as India started investigating an alleged $1 billion fraud.”
“Satyam, India’s fourth-largest software exporter, plunged for a second day in Mumbai trading on concern it may run out of money after Raju said he falsified the accounts “for several years.” The scandal, whose scope is being likened to the 2001 bankruptcy of Enron Corp., has shaken confidence in Indian companies and accounting standards.”
“The Satyam case is an aberration,” Prem Chand Gupta, the Corporate Affairs Minister said. “The credibility of the Indian corporate sector in general, and IT sector in particular, should not be allowed to suffer because of this.”, according to BBC
Update (01-10-2009): “The chief financial officer of India’s Satyam Computer Services Ltd. was arrested Saturday, the third person taken into custody in a scandal that began when the company’s chairman admitted inflating profits with “fictitious” assets and non-existent cash.
Company founder B. Ramalinga Raju and his brother, Rama Raju, Satyam’s managing director, were arrested Friday in connection with the scandal. In a letter written to investigators, B. Ramalinga Raju admitted that he and his brother were responsible for cooking the books at Satyam”, according to CNN
Satyam founder B. Ramalinga Raju
Update 2 (01-10-2009): According to Naatmad: “Satyam Computer Services, [..] has said it will take fewer people on board to cut costs due to the unstable global economic environment. The company is planning to hire only 8,000-10,000 people this fiscal as against 15,000 that it had earlier planned to recruit. [..] Around 250 employees were given the pink slip last quarter.”
Update 3 (01-14-2009): According to BusinessStandard (India): Satyam may get full-time directors in a week
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