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The worst fears of some Patni employees could come true with iGate Corporation hinting that there could be some terminations post-acquisition. In a filing to SEC (Securities and Exchange Commission of the United States), iGate has pegged the “onetime costs amounting to $14 million ($9.3 million net of tax) relating to the termination of the services of certain employees” post acquisition. It also put one-time retention bonuses at $8.5 million ($5.5 million net of tax), respectively.
The IT services company has put these costs under head of ‘Accrued payroll and related costs” in ‘Pro Forma adjustments' in the SEC filing.
(A Pro Forma statement contains hypothetical assets, liabilities, income or expenses that might arise in the future.)
Patni has over 17,000 employees, including 14,000 in offshore work and more than 3,000 at onsite locations. iGate has 8,300 employees globally, with over 75 per cent working in India.
The acquisition, which is valued at $1.22 billion, is expected to be completed in the first half of 2011.
Meanwhile, a Patni spokesperson said the company had selected around 3,600 freshers from various campuses across India (these offers were made in 2010) for the financial year 2011-12. “While a part of them will join us in the second half of 2011, the remaining will come on board as per the completion of their respective courses,” he said.
Answering a query, he said the company would honour all the campus offers.
Staff worries
When attention was drawn to apprehensions among some employees that merger could impact them and that the company might insist on guarantees for retention of only top level and lateral level managers, he said, “we view this transaction as highly synergistic with complementary strengths to build a stronger platform. Large-size combined entity will allow us to participate in large deals as well as multiple industry verticals.”
“New avenues of growth for team members of both the companies would emanate from increased scale, enhanced vertical presence and wider geographic footprint. There will always be opportunities to redeploy and develop talent at the new opportunities that this combination will bring,” he explained.
He, however, said that the duo would come out with answer to the query on staff integration once the open offer was closed and transaction was completed.
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