The aftershocks of Lehman Brothers and Merrill Lynch's spectacular collapse and fall from grace are being felt right here in Andhra Pradesh, India. Thousands of software engineers and financial services professionals working in Tier I giants like Wipro and Satyam are finding themselves in the destructive path of this financial tsunami that has rocked capital markets worldwide. While there was a degree of inevitability about Lehman's collapse, the acquisition of Merrill Lynch by Bank of America has sent shockwaves across the World. Merrill Lynch (ML) was perhaps "the" financial institution that could safely be equated with American financial innovation. Over the years, an onsite project in ML has added strength to hundreds of professionals. Right here in Hyderabad, there are hundreds of people who have built homes, paid for their sibling’s marriages and their parent’s health care costs with earnings from onsite projects in the Banking and Financial Services (BFS) sector. Apart from manufacturing, BFS was one line of business that accounted for maximum revenues in software companies.
At least in the near future, the BFS sector seems to be a path with laden with well-camouflaged landmines. A Project Manager on the condition of anonymity observed "if ML can fold up like this I really have no hope for the rest of the Companies." He has a point. Lehman Brothers after its chapter 11 filing is a lost cause for all the vendors who have been associated with it over the years. Even on a conservative estimate it is likely that well over 26000 employees will be retrenched in Lehman. And then there are over 2000 employees who work at various offshore development centers of Lehman Brothers. However proactive these companies are, it is unlikely that they will retain all the employees of these ODCs. Some of them will be "benched." Others will be directly asked to leave. In the year ahead, in Hyderabad, Mumbai and Bangalore alone the future of over 5000 employees will be negatively impacted by the tragic developments in Lehman and ML. Also in question is the future of "captive centers" of Lehman and ML. It is more than likely that employees of these centers will be among the first to feel the heat.
While the fate of engineers’ deployed onsite at these companies is not yet clear, it is fair to assume that they will be on the lookout for more stable employment opportunities. But the problem is that finding such opportunities is becoming increasingly different. It is estimated that Bank of America will lay off at least 24,000 of ML employees in the US alone. That means there will be over 50,000 resumes (including the 26000 from Lehman Brothers’) flooding job sites in the next 2 months; and these from the US alone. Also impacted adversely are software professionals from AP who have been directly employed in the US with these companies. Due to pressure in cost reductions, their jobs are most likely to get outsourced first. There however is a silver lining. These professionals will be in demand in India. .” The HR departments feel that there will be a pronounced spike in demand for Indian software engineers who have worked with these companies in the US. “We need these resources offshore,” said a technical recruiter based out of Hyderabad. The rationale is people with onsite experience can reduce the Knowledge Transfer costs involved in transition of projects. One Principle Relationship Manager (PRM) observed that software companies in India will “get more work at current or lower dollar rates.” Amidst all these scenarios, people are putting up a brave front and going about their work. After the manic Monday on Wall Street, nothing seems to surprise them anymore.
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