The Hindu Business Line : Mastek to put 10% of staff on ‘virtual bench’

City-based Mastek Ltd has put about 10 per cent of its total employee base on a ‘virtual bench’ for up to 12 months, a move which it says will help it stay profitable in the current economic downturn.

The 425 employees who have been identified would receive a monthly allowance for up to 12 months depending on their experience and qualification, according to Mr Sudhakar Ram, Chairman and Managing Director, Mastek.

“Whatever the employees’ entitlements, based on experience and qualification, they will be paid out at 10 per cent per month,” he told Business Line. (Bench period is the time when you work with a software firm and await placement as a consultant.)

Alternatively, the 425 employees – who are either trainees or junior employees – have been given the option of leaving the mid-sized IT company immediately with a compensation package. As on December 31, 2008, Mastek had 4,243 employees, of whom about 27 per cent were based on-site while the rest were at various offshore locations. Mastek, which follows a July-June calendar, has given guidance of net profit at Rs 32-33 crore for the March quarter. “These are tough times and market uncertainties are compelling us take steps that are unprecedented in our 26-year history. We have tried to balance the margin requirements of the company with the aspirations of young Mastekeers, and have come up with a plan that gives people an option to reinvent themselves as professionals. My sincere intention is that we tide over this crisis at the earliest and get our virtual bench back on to engagements,” Mr Ram said in a press statement.

Training programmes

For people on the virtual bench, various internal departments are working on plans to provide training and development programmes to make this ‘forced break’ as valuable as possible, he added.

“We expect the situation to improve in the latter half of calendar 2009. If it so happens, these 425 employees can get back to full-time employment,” said Mr Ram.

With this move, Mastek expects staff utilisation for February to go up to 86 per cent, he said. The company had added 225 employees in the quarter gone by. It has also been implementing a series of measures to reduce its operating expenditure over the past few months and plans to aggressively take additional steps that include reductions in travel expenditure and scaling down of other spending wherever possible.

For the quarter ended December 31, Mastek had reported a net profit of Rs 31.3 crore against Rs 27.1 crore reported in the corresponding year ago quarter, on revenues of Rs 256 crore.