Fringe benefits for employees are being cut down.
A 36-year-old bank employee in Mumbai had made plans for an extended vacation at Madikeri after the quarterly offsite in the beautiful hill town by the Western Ghats in Karnataka. However, he had to cancel the plans since the bank decided to shift the venue to Karjat to save costs.
At a brokerage firm in Hyderabad, the annual awards night for 2019, was cancelled, due to paucity of funds. The cancellation came as a shock for employees who were working for four months on the event, for which Telugu film stars were expected.
The slowdown in the Indian economy is slowly but surely making an impact on the cost structures of companies. These include clamp on the variable pay, annual perks and off sites. Some companies that used to distribute gifts quarterly, have now made it an annual affair, and fewer are sending employees on trips.
Much of this cost cutting is seen in companies in sectors such as non-banking financial companies (NBFC), agri-input, telecom and power, said Aditya Narayan Mishra, CEO, CIEL HR Services.
"This is in sectors which are not sure of a future recovery. Sectors under stress like aviation are also taking small steps like this. Agri-input companies will look at the monsoons and then take a call on how to proceed with HR decisions in the future. But Union Budget will become a crucial event to watch out for," he added.
Telecom, power as well as several NBFCs have a hiring freeze on one hand, while they are subtly cutting costs on the other end.
The human resource head of a mid-sized IT services firm in Bengaluru said that the global situations including the US-China trade war is having a spill-off effect into India. Due to this, he added that companies are restricting any non-material employee expenses.
Take a Mumbai-based telecom company for instance. Replacement hiring is on the stand-still, increasing work-load of the existing staff. Due to this, employees are required to work two Saturdays a month, compared to the five-day week earlier.
Rituparna Chakraborty, Co-Founder and Executive Vice President, TeamLease Services, said that in sectors like telecom, the period of recovery will be longer.
"In sectors like NBFC, it is a reaction to the current environment and the situation won't last very long. However, I believe that these are the ups and downs in the businesses and while they will be prudent, there will not be large-scale clawbacks," she added.
India's gross domestic product (GDP) grew 5.8 percent in January-March, official data released on May 31 showed, confirming fears of a slowdown, as the new government assumed office amid expectations of a wide ranging policy impetus to turnaround the economy that is nursing multiple pain points."Real" or inflation-adjusted GDP grew 6.8 percent in 2018-19, lower than previous year's 7.2 percent, data released by the Central Statistics Office (CSO) showed.The growth in GDP was slowest since 2014-15.