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.

Recession casts shadow on economy, says study

Notes that Kerala is more vulnerable to external shock

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Recession may hit job opportunities

Further cut in oil prices may have negative impact

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Reduction in oil price and sustained low-level reduced investments in Gulf countries can have a negative impact on the job opportunities as well as the income of Non-Resident Keralites (NoRKs).

According to a study conducted by the Centre for Development Studies (CDS) on the impact of the economic recession in the State, Kerala is more vulnerable to any external shock, including the slowdown since it is integrated with the rest of the world.

In spite of the liquidity concerns about the banking sector of Saudi Arabia, United Arab Emirates (UAE) and Qatar, the economies of the seven Gulf countries, where majority of the NoRKs are located, continue to remain unaffected owing to the steps taken for improving the liquidity position.

But further reduction in oil price and investments can have a negative impact on the job opportunities and their income., the study says.

About 32,000 people employed in the coir industry are likely to lose jobs owing to 20 per cent decline in coir exports. The job loss in the cashew sector has been estimated at around 18,000 due to 15 per cent fall in exports and imports becoming costlier. Marine exports may go down by 25 to 30 per cent to all major destinations except South East Asia. In the short run, a one-third fall in exports can lead to a loss of 20,000 jobs in the sector.

Handloom units have reported 20 per cent dip in sales. A short-term reduction in export by 15 to 20 per cent is expected in handloom goods and that may further increase if the recession prolongs. The value and quantity of pepper export have come down by 50 per cent between September 2008 and the same month last year. The price of rubber has registered a 40 per decline due to the fall in demand from the tyre industry.

The major software export companies are yet to feel the pinch of the crisis but IT and ITES companies at the national level expect 50 per cent reduction in growth rate. The companies in the State have not yet got a full exposure to the crisis due to their relatively lesser engagement with financial services.

Being a consumer State, Kerala can benefit from the reduction in prices of oil, steel, cement and such others as it will also reflect in the cost of manufactured goods too. The growth rate of the State’s economy may decrease by 2 to 3 per cent and it can also lead to an increase in revenue deficit, the study says.

Maruti may cut production if demand remains sluggish

Maruti Suzuki said on Wednesday it may consider production cut if the market does not improve.

The company, which has been negotiating contract manufacturing deal for its A-Star model with Nissan, also expects to start exports for the Japanese car maker by around February-March next year.

Maruti Suzuki India managing director Shinzo Nakanishi said that across the world there has been a slowdown in demand, including China, India and other BRIC countries.

"I hope not but if we are obliged then we will do it," he told reporters here when asked if the company would go for a production cut.

On the company's planned export of the A-Star for Nissan, an agreement on the volume has not been signed as yet but shipment to Europe is "expected by about February-March next year," he said.

"Our focus is on the network stocks. If the network stock is overflowing, then the company would take appropriate measure," he added.

In the April-November period, the company's sales growth witnessed a negative growth of three per cent compared with the corresponding period last year.

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.

British auto biz to see 40,000 job losses

The British auto industry is expected to witness 40,000 job losses over the next three years, mainly due to falling demand for cars, says a media report.

About 800 job losses seemed at risk in the near future in the country's car industry following Japanese major Toyota Motor's warning that it would post losses, The Times reported on Tuesday.

"A further 800 jobs in Britain's car industry were put at risk yesterday after Toyota Motor, the greatest example of Japans post-war economic miracle, warned that it will go into the red for the first time since 1941," the daily said.

Moreover, The Times noted that the possible job losses -- about 15 per cent of Toyota's workforce in the United Kingdom -- "would add to the 40,000 positions expected to be eliminated from the 200,000-strong British car industry over the next three years, as sharply declining demand for its cars is likely to trigger redundancies across Toyota's businesses."

Globally, auto industry is facing a tough time with declining sales in the wake of worsening economic turmoil.

Toyota makes Auris, Avensis and Corolla models at its plant in Burnaston and Derbyshire, and manufactures engines at its Deeside factory in North Wales, which employs5,250 people, the report said.

The Times pointed out that the Japanese car maker recently decided to halve the number of shifts on its Auris production line and would also close its Burnaston plant for four weeks over the next four months.

According to the report, Vauxhalls owners are in talks with trade unions over pay cuts and a four-day week and has offered nine-month sabbaticals to thousands of workers at its Ellesmere Port factory in the North West of England.

Indian-American CEO of tech firm shot to death

An Indian-American CEO of a semiconductor company was shot dead along with two other persons by a laid-off employee of the firm in northern California, police said. 

Sid Agrawal, the chief executive officer of SiPort Inc, the company's vice president of operations Brian Pugh and an unidentified woman was killed when several rounds were fired on the premises of the firm in Santa Clara on Friday. 

Police said investigators are searching for Jing Hua Wu, 47, in connection with the shooting. Jing worked as a lead product test engineer for the four-year-old firm, media reports here said. 

Police said he had recently been laid off from the company and investigators are exploring that as a possible motive in the shooting. It is believed that a handgun was used in the shooting, a police official told reporters. 

Police released a description of the vehicle in which Jiang is believed to have fled and launched a manhunt for him. According to his biography in the company's website, Agrawal had more than 25 years of experience at startup and established high-technology companies, including at Adobe, Intel and Bell Labs. 

He held a degree in Electrical Engineering from IIT-Kanpur, an MS degree from Southern Illinois University and an MBA from the University of Chicago. 

ADAG says no firing; to hire 90,000

In the midst of massive layoffs being announced by various corporate houses hit by a global economic slowdown, Anil Ambani group on Friday said it is not planning any job reduction and is rather planning to create up to 90,000 employment opportunities in the next few months.

Debunking the reports that the group is laying off 6,000 people in its financial services and entertainment businesses, a spokesperson said, "There are no layoffs."

"In fact, the coming three months are high investment period for tax saving products and we are going to appoint almost 75,000 to 90,000 agents and sales representatives in the coming months," he added.

Earlier this month, Reliance Life Insurance's chief P Nandagopal had told PTI that the company would recruit 90,000 insurance agents and 2,500 sales managers by March 2009.