MUMBAI: Hewlett Packard (HP) has started laying off employees in Bangalore with the number of those who will eventually lose their jobs expected to be above 800, according to people familiar with the development. They said the process started on Monday in the aftermath of HP's IT services unit losing part of the Bank of America (BoA) account to HCL Technologies.
The employees belong to level 1, 2 and 3, some of them part of the support team. These levels correspond to expertise in fixing problems.
When asked about the layoffs, an HP executive said: "The report has no merit." An HCL Tech spokesperson said, "We don't comment on rumours."
"Letters started going from Monday onwards and started mainly with the support group, and they will probably be given one month's notice period," said one of the persons cited above. The company reportedly employs more than 317,500 people globally. An HP official said it does not provide details about staff strength by location.
Apart from Bank of America, the Palo Alto, California-based company has prized contracts with American Express and others that are up for renewal. According to an earlier report by ET, Indian outsourcing firms including Tata Consultancy Services, HCL Tech, Wipro and Infosys will be fighting hard for contracts worth $55 billion that will be renegotiated this year.
Global outsourcing companies including IBM and Accenture will also compete for these. At least 10 of these deals are worth more than $400 million each and eight of these have been running for about eight years."Around two-thirds of the outsourcing market is filled with old deals that are always getting renegotiated and renewed," said Siddharth Pai, partner and president, Asia-Pacific, for advisory firm Information Services Group. "This allows new players to come in and there are times when Indian players can lose deals to global players as well. Many of the deals getting renewed now are those made in 2009."
Dipen Shah, head, private client group research, Kotak Securities, concurred. The reason why contracts may move to Indian vendors is because they have been specifically focusing on gaining expertise in these, he said.
"Clients in the US and Europe are looking at breaking up the deals, and giving smaller, specialised jobs to vendors, and Indian vendors have built up competencies to do these," Shah said. "HCL Tech, which has built up competency in the infrastructure management space, has been focusing specifically on the re-bid market, more so than other vendors."
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