Satyam to lay off support staff to cut costs

9 Feb 2009, ET Bureau

HYDERABAD: Tainted Satyam Computer Services is set to lay off salesmen to trim costs as it struggles to meet operational expenses and repay dues to creditors. Nearly 10% of the software firm’s 53,000 employees provide support functions.

“We are looking at rationalizing employees who provide pre and post-sales services onsite as part of the cost-rationalization exercise,” said T Hari, global head, marketing and communication, Satyam. Around 10,000 of Satyam’s employees provide onsite services to clients.

The software firm cannot account for revenues from its support staff as they are “non-billable” employees in technical parlance.

The support functions include HR and finance, besides pre and post-sales services. One option would be to move employees from non-billable to billable roles to bring in revenues into the company.

The number of such fresh recruits is estimated at over 5,000. Analysts, who did not wish to go on record, said the exact cost savings would be known only after the company’s accounts are restated.

Last year, the company had scaled down hiring projections for FY09 to around 8,000-10,000 people against 15,000 it had earlier projected, citing the global economic meltdown. It may, however, go all out to retain associates who are critical for projects.

“The focus would be to hold back at least 15-20% of the associates working on a specific account as the company reckons that they are needed for customer continuity as well. We will look at a higher monetary and non-monetary compensation for this segment,” he said. Satyam will also end contracts for buildings it has taken on lease to save rental costs.

“But given the current state of Satyam, trimming of salesforce overseas is imminent. We have no plans either to take on board graduates who were offered jobs a year ago,” he said.