Layoffs not real answer to effective cost control

As businesses brace for a possible economic slowdown, they are expected to further slash unnecessary expenditure and bring down overheads to improve the bottom line. Trimmed down budgets and well-planned cost cutting initiatives can help create savings and optimise operating margins for companies that don’t have too many sources of revenue to look forward to, thanks to the global financial crunch.

Here are areas where businesses, big and small, can cut spending and create valuable cash reserves to tide over any impending crisis.

Realign goals: For example, the annual budget may need to be altered to cope with new circumstances, and expansion plans may be put on hold. Look for ways to release cash from capital. Unused/ high maintenance assets are usually the first to go in a bid to reduce operating costs and retain liquidity.

Cash requirements might also have to be carefully projected and closely monitored. Tighten conditions relating to cash and accounts receivables and negotiate for better deals with vendors and contractors.

Focus on work that counts. Fall back on your best, most dependable products and services, and aim to get more value for every penny you invest. Outsource non-essential processes if it will bring down costs and improve production and people practices to increase productivity levels and lower operating costs.

Go slow on hiring and layoffs. Going slow on hiring makes obvious sense, but layoffs are another matter altogether.

Although at first glance layoffs seem to offer a quick fix answer to cost control, the mid-term and long-term consequences of layoffs are disastrous. Look at your employees as assets, not overheads.

Train employees to improve their skills and utility ratio and acknowledge and reward deserving employees even if resources are scarce. This is the time for you to let your employees know that they make a difference.

Cut down on unnecessary costs and discretionary spending in areas like travel, entertainment, telephone calls and meetings. Tighten regulations and minimise cash advances. Institute stringent receipt requirements for all reimbursements. Offset expensive incidental benefits such as performance bonuses, high premium health benefits, stock options and legal assistance with other benefits that are easy on the pocket.

Conduct an energy audit. Even simple things like introducing energy efficient lighting, heating and cooling can make a big difference to running costs.

Ask employees for suggestions. Employees usually have a wealth of ideas, and tapping this powerful source can give the organisation some innovative and inspiring leads to keep costs under control.

Revaluate your strategy and decide on the how you are going tackle the situation. Revisit priorities and ensure that your team has a complete understanding of the contributions they are expected to deliver.

During a period of boom, companies often neglect to keep track of spiralling costs and wasteful expenditure. It may not have mattered then, but with economic challenges looming ahead, a little prudence will ensure that the organisation is able to sustain its effectiveness and profitability in the long run.

IT job losses in India can top 50,000 in Jan-June 2009

Over 50,000 IT professionals in the country may lose their jobs over the next six months as the situation in the sector is expected to worsen due to the impact of global economic meltdown on the export-driven industry, a forecast by a union of IT Enabled Services warned. ".

There would be 50,000 job losses (IT and BPO put together) over the next six months," Karthik Shekhar, general secretary of UNITES India, a politically neutral union of ITES professionals told PTI. The job loss in the IT and BPO sector in the country topped 10,000 in the September-December period, Shekar said. While employees of medium-sized companies bore the brunt of job losses in the September-December period, it's going to be their counterparts in the big and small firms who would increasingly face the axe in the coming six months, he said.

UNITES India, affiliated to the global union United Network International, suggested that the companies in trouble could resort to salary and incentive cuts without trying to "squeeze" the staff, rather than adopting the "layoff path". Employees are willing to take such cuts for 12-16 months till the demand picks up again, when such benefits should be restored to them.

Shekhar said senior officials of the industry had concurred with the figure of 10,000 job loses in September-December, stating that it accounted for "bottom five per cent of the performers". Consultations with the union's counterparts in the US and UK suggested that slowdown would continue to hit the offshore sourcing space, he said.

He said factors like continued slowdown, likely "tax application" to companies outsourcing jobs under the new US regime and tightening in regard to H1B visas were among the key reasons cited for the acceleration in issue of pink slips. PTI.

Govt tells RoC to give report on Satyam deal in 3 weeks

The government has asked Register of Companies to look into the Satyam-Maytas deal and submit the report within three weeks.

"We have asked the RoC to look into the matter, get the information from the company and inform us within three weeks as to what is the factual story. Only when we have the information can the government do anything," Union Corporate Affairs Minister Prem Chand Gupta said in New Delhi pm Saturday.

When asked if there is a prima facie case for probe, he said, "let us not try to influence the whole process. Let us wait for few days and get the information. . . we can't say anything unless we get the report."

The incident, he said, has brought bad name to the corporate sector, not only in India but throughout the world. "I won't say whether there was any irregularity or not unless we get the report, but unfortunately this has brought a bad name to the corporate sector not only in India but world over . . . very unfortunate," Gupta said.

He said though the government has always been of the opinion that corporates should be given a free hand in dealing with their daily affairs but "certainly we want that they should govern themselves with accountability and that they should keep the larger interest of society and stakeholders".

Satyam Computer services [Get Quote], India's fourth largest software company, had decided to buy two firms promoted by Satyam chief R Raju's two sons -- Maytas Properties and Maytas Infra -- for %1.6 billion (about Rs 8,000 crore), but called off the deal within few hours following investors' wrath.