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Thirty-five-year old Sampath Tilak Vegi first started working on the Lehman Brothers account a few years ago. At that time, he had no idea how closely his fortunes would get entwined with that of the now defunct investment bank. The tango started almost two years ago. Vegi was living the great Indian IT dream. He had 10 years’ experience. He was working for TCS, India’s largest IT services company in Bangalore, servicing a marquee customer. He had just received a 25% pay hike and was contemplating buying a house in his hometown, Visakhapatnam. Life was good.

A few continents away, the New York-headquartered Lehman Brothers had just posted record revenues and profits, and was handling assets of over $275 billion. At that time, Vegi was sitting on multiple job offers. One was from American outsourcing giant EDS and the other from Wipro, India’s second largest IT company. Both offered to pay him substantially more than what he was earning at TCS. But EDS was willing to pay a little more than Wipro.

Multiple job offers and generous pay hikes were nothing unusual in the IT industry. Talent was hard to come by. Companies had to pay plenty in cash, bonuses, perks and stock options to retain existing employees, and attract new hires by the thousands. New contracts from US clients were flowing in easily and IT companies had a simple formula for success: they could grow as much as they could hire. They often behaved like sharks in a feeding frenzy. They hired indiscriminately.

Vegi chose to accept Wipro’s offer ahead of EDS. “I thought my job would be more secure with an Indian company,” he recalls. Soon after, on September 14, Lehman Brothers filed for bankruptcy. In three months, the bank would be just a footnote in financial history. When Vegi heard the news, he was in Vizag for his housewarming ceremony. “Good I moved out of that account,” he thought. But he had no inkling of the catastrophe awaiting him the next day.

On September 15, Vegi was summoned to his supervisor’s cabin. He had been a part of Wipro’s ‘free pool’ (the bench, IT industry lingo for people without any work to do) for a few months. “The supervisor asked me to resign as there were no projects,” recalls Vegi. If Vegi were to be assigned a project during his notice period, the supervisor promised to reinstate him. The supervisor then pushed his laptop across the table and asked Vegi to type out his resignation letter. Flustered, Vegi asked for time.

He didn’t get any. Over the next three hours, Vegi says he was badgered with half a dozen calls from his supervisor. Pressured, he quit the same day. Vegi alleges that his efforts to find other projects within the company during his one-month notice period were spiked. Angry at the “betrayal”, he demanded to take back his resignation almost a month later. “I was told that I could not do that,” he recalls. He was given an extra month. Wipro, he alleges, kept up the pressure—resign or be terminated from service. Wipro, on its part, says there have been no layoffs due to business reasons. Says Pratik Kumar, Executive Vice-President-Human Resources, Wipro: “The involuntary exits have been based primarily on performance parameters.”

Vegi resigned for the second time in March 2009—this time for good. He had spent a depressing nine months on the bench in his year-and-a-half long stint at Wipro.

Two painful months have gone by since Vegi quit Wipro. He has given up all hope of finding another IT job. His family has moved back to Visakhapatnam and he plans to follow them as he can no longer pay the rent in Bangalore. Vegi is also in the final stages of selling his Visakhapatnam house for Rs 18 lakh as he can no longer pay an EMI. He had purchased it for 22 lakh.

Jobs On The Block

Vegi’s IT dream has turned into a nightmare. Across India, thousands of dreams of IT professionals lie shattered as companies are shedding employees to cope with the slowdown. Infosys Technologies, the flag-bearer of the Indian IT dream, said it will show “zero tolerance” to non-performers, and put 2,100 employees under the scanner. The new Mahindra management of the troubled Satyam Computer Services has announced that it has 10,000 unwanted employees. Precise numbers on the job losses in the IT sector are not available. But the figure could run into tens of thousands. Some experts say that 3.5-5% of the 2.2 million IT jobs have already been lost or are likely to be lost in the next few months. That puts the job loss number at 77,000-110,000.

This is not just an IT industry problem. This could potentially lead to a social crisis. The software industry employs more people than the Indian army, the third largest army globally. Over 80% are young (under-40), in the prime of their earning lives, and have families to support. Even though less than 5% of jobs are at risk now, a fear psychosis has gripped the entire community of IT professionals. Many have seen a colleague being fired. They are worrying that they could be next.

This fear has led to a freeze on spending. Pubs in Bangalore are empty; one is even offering “recession discounts”. Real estate prices, both housing and commercial, are sliding. The Promoters and Builders Association of Pune has launched a scheme where the developer will pay three EMIs in case a customer loses a job. Senior officials in a private sector bank confirm employees in the IT sector are in the negative list of borrowers. Many jobless are putting their cars and houses up for sale. Parents don’t want to marry their daughters to IT professionals.

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