Last April, French IT giant Capgemini announced its $4-billion acquisition of Nasdaq-listed IGATE, which had a global talent pool of over 30,000 employees, mostly based in India. On January 22 this year, IGATE’s brand transitioned to Capgemini, an event marked by a Bollywood dance performance by nearly 5,000 employees (including those from the acquired company), which lasted for over half an hour, setting a Guinness World Record.
A lot of hard work went into this harmonious performance, as in the seamless integration of the two companies. Immediately following the announcement, Capgemini’s group chairman & CEO Paul Hermelin conducted town halls for IGATE’s employees to allay fears of any layoffs. Next, the initial months following the acquisition were a ‘discovery phase’ during which, aided by a neutral external consultancy, existing work stream models were studied to
enable adoption of best practices from both the companies. For instance, the new fresher’s hiring model, which is now used at Capgemini in India, has been picked up primarily from IGATE.
“Last year, our focus was on integrating the client base and our people. In 2016, we launched the ‘Power of One’, an internal campaign to bring together every element of the business, process, and people and move towards a stronger and more powerful Capgemini. Additionally, we have a very attractive retention package to ensure that we are able to retain every IGATE employee who came into the system,” said Navin Goel, head (integration) at Capgemini. “There have been no layoffs,” Goel claimed.
Capgemini’s main task was integration. For this, onboarding comprised induction packs, a special intranet site, and an email helpdesk where queries were replied to by the integration management office leaders. It also helped that the new leadership structure had a fair representation of IGATE leaders.
Any hint of delays in funding at a startup, or a buzz of a potential corporate acquisition or restructuring, feeds the grapevine and creates panic. While the incident of a co-founder of TinyOwl, a startup, being reportedly taken hostage for several hours by irate employees remains an aberration, any downsizing exercise or post-acquisition integration (even if layoffs are not entailed) requires sensitive handling.
“An employee in India is not attuned to accept mass layoffs, the employer is seen as one who has to be benevolent,” said K Sudarshan, Asia managing partner at EMA Partners. Global operational restructuring or reduced demand has triggered job losses, especially in the IT, ITeS, niche manufacturing and BFSI sectors. At startups, lack of scalability or cash-flow crises results in pink slips. “No employee can fault a valid business reason for layoffs. But, if the process is not transparent and proper communication is missing, an employee feels short-changed,” said Moorthy K Uppaluri, MD & CEO, Randstad India.
At times, employees caught up in downsizing can continue to suffer for months. Kingfisher AirlinesBSE 3.03 % defaulted not just in payment of salary, but it also did not deposit with the government the taxes it had deducted from salaries paid to employees in the past — the employees had to face the taxman’s wrath. On the flip side, a satisfied ex-employee of an IT company says, “Our unit was sinking faster than the Titanic, our retrenchment compensation, was a jet ski to the shore.”
The Legal Angle “In the US, an employee may find a ‘pink slip’ on his desk requiring him to clear out the same day. ‘At-will employment’ (except in Montana) is a given, enabling immediate termination with no adverse legal consequences,” said Shihabudin Abdulkhader, labour law counsel.
“Comparatively, India’s laws provide a safety net. The Industrial Disputes Act (IDA), in cases of retrenchment, requires a month’s notice (or salary in lieu of notice) to be given to all ‘workmen’ who have completed at least a year of service. A retrenchment compensation of 15 days’ pay for every completed year of service is also mandated. These provisions apply across the board, covering even the services sector. Several companies are unaware of the fine print, unscrupulous ones try and wriggle out of it,” he added. Abdulkhader also busts a misgiving that ‘workmen’ under IDA means only blue-collar workers.
Let Them Go, Kindly According to Sudarshan, measures a company could adopt if there are layoffs include counselling, outplacement, compensation beyond contractual requirements and redeployment within the group. Uppaluri added, “The solution is an interplay between the financial equation and the human element. Cognisance must be taken off the tangible and intangible benefits that a smooth process offers, such as brand image or that retrenched employees could be future customers or returning employees.”
A foreign bank, undergoing closure of its banking operations in India, is learnt to be redeploying several of its employees to its back-office unit servicing its global operations.
