According to a recent report by the Labour Department, approximately 3.3 million people filed for unemployment benefits for the week ending March 21. This is a record-breaking increase from the previous figures and is also the highest level of claims in recorded history. With the increasing fear of job losses looming amid COVID-19 pandemic, all major tech companies are aiming to pledge no layoffs for 2020.
No Layoffs Amid Coronavirus Crisis
Marc Benioff, the CEO of Salesforce, had recently tweeted a statement to his employees pledging no significant layoffs for the next 90 days. Benioff also urged his top executives to do their part by helping workers keep their jobs during this tumultuous time. In his eight-part Twitter thread, Benioff also wrote, “We will continue to pay our hourly workers while our offices are closed.”
In another act of kindness, the CEO of Morgan Stanley promised to not issue any layoffs within the company. He reassured his employees that there will not be a reduction in staff in 2020. This does not take into consideration any performance issues or breach in code of conduct.
Additionally, the chairman and CEO of Visa assured his employees that the company would have no COVID-19 related layoffs in 2020. Even Cognizant, with 65% of its employees working in India, has announced paying an additional 25% of the basic pay to most of its staffers in India.
As far as Indian IT services firms are concerned, it is difficult to take any public stand on layoffs like many US firms, since 55-60% of their operating expenses comprise wages. So, any decision not to reduce the staff base can adversely impact their cost structure. However, despite the grim business outlook, firing staff owing to business disruption and consequent demand slowdown is not likely to happen in a big way given the sensitivity of the issue. Even many large Indian corporations, including Bajaj Auto, Vedanta group, and Essar group have stated that they will not be reducing their headcount.
Meanwhile, according to experts, given the high employee utilization level and the strength of the reserve employees who are not working on any projects, tech companies are in a better position to absorb the adverse impact on cost. The utilization level of Infosys stood close to 85%, and Wipro was at around 80% at the end of the fourth quarter of 2019-20.
Google, Microsoft, Facebook and others have also committed to paying hourly workers during COVID-19 office shutdowns. Amazon’s CEO, on the other hand, shared an Instagram post where he had encouraged those who had been laid off during this pandemic to consider working for the company. Joining the effort, IBM also stated that the company has no plans to lay anyone off any time soon, and started “running the business as virtually as possible.”
Although the initiative is small, the movement is encouraging for tech companies. This commitment of CEOs toward their employees is a part of a bigger effort, where 180 CEOs and corporate executives pledged to change the way they conduct their businesses. All too often, we see company leaders becoming more concerned with business profits over their employees, and this initiative came as a breath of fresh air, where CEOs will be taking decisive actions that serve the best interests of their employees.
Moving forward, the companies have promised to focus on their employees and not just on the bottom-line profit. With this commitment, the companies will start to invest in their employees, which begins with providing them with fair compensation, along with supporting them through training and education that will help them develop new skills.
Experts also believe that this is the perfect time for the tech industry to send across a long-lasting message of providing a sense of security to their employees by retaining their existing staff members. Alongside, there are several areas where expenses can be cut, where the budgets can be rationalized to necessary aspects. Several business consultants and HR experts said companies need to be careful when it comes to allocating budgets, as job and pay cuts would further aggravate the problem.
Aroon Kr Aggarwal, managing partner of a headhunter firm, Bradford Consultants, acknowledged the criticality of this unique situation for employers and employees. They stated that organizations should take a sympathetic and rational view of their staff. According to him, companies can rationalize their expenses by cutting costs from travel, variable pay/bonuses, training etc, which can, in turn, save 5-6% of company costs, which can be used to avoid pay cuts.
Agreeing to that, Juhie Sinha, the founder of TalentART Partners, said it is critical for companies, in this current crisis, to show their care and value for their employees. “Some immediate measures businesses can take immediately after the pandemic ceases is to use technology more effectively, minimizing travel to essential ones, conducting training programmes online, and having webinars instead of large events,” said Sinha.
The downturn is indeed creating an immense problem for tech companies to make informed decisions to keep their companies afloat. However, if the businesses are led with compassion and teamwork, it will be easier for tech companies to come out of this potential slowdown, enhancing the shared values of your employees. However, for now, we should applaud the companies taking bold strides to aid their employees, and help the economy in this time of crisis.