India- based multinational companies (MNCs) have promised employees that there will be no or insignificant layoffs as we enter the third week a of the Covid-19 outbreak and lockdown. While some are going for a 90-day no-layoff stance, many others are opting to put a full stop on retrenchment. A few have frozen new appointments to protect existing employees.
Among them are SAP, Morgan Stanley, Salesforce, Palo Alto Networks, PayPal, Citigroup, JP Morgan, Bank of America and Booz Allen Hamilton. JP Morgan India, in its statement, has reiterated importance of human resource. “That is why we are consciously making decisions designed to prevent any new layoffs as a result of Covid-19, including significantly reducing hiring - in many cases stopping it completely - and working with local governments and officials,” the spokesperson said. JP Morgan has 34,000 employees in India, its largest workforce outside the US.
SAP has delayed any decision making for 90 days. “We have our valued employees in our hearts and want to assure them that we have their backs as we deal with this health crisis now,” a company spokesperson said. SAP India is estimated to have around 13,000 employees in India.
Morgan Stanley CEO James Gorman was quoted in the US media as saying that employees’ jobs would be safe this year. It has 3,300 technologists in India. Salesforce CEO Marc Benioff has pledged to do no significant layoffs for 90 days, and Booz Allen Hamilton till July 1.
Palo Alto Networks CEO Nikesh Arora tweeted his commitment to no Covid-related layoffs “to allay concerns of our employees”. The company has over 7,000 people in California, Tel Aviv and India. Most companies have seen a dramatic reduction in business because of lockdowns around the world. That affects revenue immediately, but companies have to continue paying their workforces even though there is less work, and less profit.
Vijay Govindarajan, distinguished professor at Tuck at Dartmouth, said he is a firm believer in free markets and the process of creative destruction where weaker and inefficient firms fail, resulting in layoffs in those firms. But the current situation, he indicated, was different - a result of sensible government-mandated lockdowns. “Large companies like Google, Amazon, and Walmart must take the no-coronavirus layoff pledge and use their reserves to continue to pay employees, say, 75% of the salary and guarantee full health benefits,” he said.
