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After Infosys, Satyam tries the employee sabbatical option

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We already know that Infosys has requested its employees to go on a sabbatical and work for NGO’s for half the salary. This is a voluntary program for employees who are with Infosys for more than 2 years.  Employee is free to get a salary from NGO’s.

This move has raised a lot of discussion – around the real motives of Infosys. Is it cost cutting or company’s vision? There is no consensus yet but, Satyam was more brazen in its announcement.

Satyam has given the sabbatical option to its employees. It is seen as a cost-cutting cum social service move. Unlike Infosys, Satyam did not say how much salary cut will there be. From the ET report it is not clear if it is voluntary or not.

Though the final decision will depend upon their quarterly earnings, it is more than likely that the sabbatical scheme will be implemented. Employee costs are at 55-60% of the total cost for the company. With US going from contraction to recession, we might see more such moves from other companies as well.

No real resolution is in sight for the economy. It is important that US will not be in a prolonged recession, which might lead to depression. US consumes most of the software services. IT companies might hedge by moving to other countries but the gloomy  outlook has spread everywhere.

What should the companies do? Cut costs. With Indian labor laws protecting the employees to some extent, the companies will look alternate ways of reducing the headcount from fudged bills to sabbaticals.

What other innovation can we see in cost cutting from IT companies? How about removing free coffee?

PS : ESOP now stands for Employee Sabbatical Option.

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