Bangalore tech centre: Salary cuts for 1 year
By Arundhati Kumar

In May, 2009, techgoss had reported a cost cutting measure adopted by Bangalore-based Kennametal Shared Services Private Limited (KSSPL), the captive information technology support unit of US-based Kennametal Inc. The management of KSSPL had decided that there would be a salary cut for one week, making it a twenty-five percent salary cut.

This cut in pay was balanced off by one week of forced leave and unpaid furloughs.

With July 2009 on the brink, the new fiscal year for Kennametal Inc. worldwide is about to begin. Techgoss has learnt that at this point there are a whole lot of changes happening in the organization on the strategic front, and further measures are being taken to reduce the costs. This cost reduction is being done because of the reduction in the revenue inflow of the parent company, Kennametal Inc, and its Indian subsidiary, Kennametal India Limited.

As a further measure to reduce costs, the management of KSSPL has announced that there would different amounts of cut in the salary of the employees according to their designations (impact levels in Kennametal parlance).

For the designation Associate, Executive, Assistant Manager, Manager and Senior Manager, there would be a five percent cut in salary; and for the higher designations there will be a ten percent cut in the salary. This reduction in salary will continue till end of the new fiscal year that commences from July 2009, which means that this salary cut would continue till end of July 2010. In addition to this, the management has decided to cut the variable pay across levels in the organization. Variable pay is given out on the basis of the organization’s performance as against its business targets for the current fiscal year. The management has also announced that there would be no merit increase (annual salary hike) this year. This normally happens in October of every calendar year.

The announcement has further invited huge amount of mixed feelings. There are factions of people who believe that this is still better than laying people off, and there is a faction of people who do not think this is a good idea, in terms of employee motivation.

Unquestionably, tough times indeed.

(Techgoss had run the following story on May 25, 2009)

Bangalore Tech centre: 25% Salary cut
By Arundhati Kumar

Bangalore-based Kennametal Shared Services Private Limited (KSSPL) is a captive unit set up to provide Information Technology support to Kennametal Inc., one of the leading manufacturing organization and provider of Metal Cutting solutions. Kennametal Inc. is based in Latrobe, Pennsylvania in United States and is the market leader in providing Metal Cutting solutions.

The operations of Kennametal are spread across most continents and it has offices in around sixty countries. Kennametal also deals with tooling solutions for aerospace and automobile manufacturers, mining and highway construction industries.  Its total head count is 13,000 and it had revenues of $2.3 billion last year.

There are about 140 employees working for KSSPL and about 1000 employees for Kennametal India Limited- the manufacturing unit.

During these tough economic times, Kennametal Shared Services Private Limited, like other tech organizations in India, is concentrating on cutting costs. In the process, the management of Kennametal Shared Services Private Limited has decided to give out forced vacation to the employees and deduct twenty-five percent from their salaries. This will be implemented in May and June 2009. Techgoss has learnt that the situation will be reviewed again in July 2009. The employees are being encouraged to be on furlough (a week off, without pay) in a planned, phased manner so that the internal customers are not affected, and there is no setback in the support provided to Kennametal Inc. worldwide.

There are mixed feelings in the employees of Kennametal Shared Services Private Limited regarding this decision. There is a group of people that opines a pay cut is better than laying off people and bringing down the morale of the employees, and there is another faction of employees that believes the pay cut too would be detrimental to the employee morale.

These are certainly tough times for most tech companies.