Satyam puts 5000 employees on virtual bench

Satyam has put almost 5000 employees on virtual. Those on the virtual bench will not get full salaries, 50-60 per cent of salaries may be cut and the number of working days reduced. Also, some people may be put on training with only 25 per cent of the salary paid. Besides, sabbaticals of over a year's time will be encouraged and employees will also be given a choice to leave with severance package.Raju Kapur, business head at Ikya Human Capital, said, "Virtual bench is a partial lay off. It is a cost cutting method. Employees are the biggest cost for an IT company and the result of cutting the amount of salary out flow, will immediately reflect in the company’s books."
Tech Mahindra in its due diligence process of Satyam had estimated over 15,000 employees as excess on base of 45,000 employees eating heavily into Satyam's margins.But a straightforward layoff in Satyam is not an option for Tech Mahindra, especially with the government involved in the process.
Meanwhile, apart from creating a virtual bench, Tech Mahindra is also absorbing about 2000 Satyam employees in its fold and has opened recruitments in Pune, Mumbai and Noida. But these employee-trimming plans are still on paper and margins will still bleed some more. It’s time for Tech Mahindra to see through some tough decisions.