Triggered by the subprime mortgage crisis, the US financial crisis (2008), resulted in a sudden downfall in all the major economic indicators leading to unprecedented layoffs the world over. Amidst these layoffs, Satyam Computer Services Ltd., was hit by an internal financial scam, aggravating its situation more than any other Indian IT company. As the future of the company hung in a dilemma, Tech Mahindra bought a controlling stake in the organization and declared that it had to solve the problem of surplus workforce at Satyam, which ranged between 7,000-10,000 associates. Amidst speculations of massive job losses, the company announced an innovative scheme - the Virtual Pool Program (VPP) - to address the issue of surplus workforce, while at the same time, retaining talent. However, can VPP be called as an effective talent management strategy amidst the downturn? VPP has also been called as an indirect way of laying off people.

It was official in September 2008- the financial services industry, led by major global (and US) banks, wrecked the global economy with their engulfing and enveloping features. Soon, the crisis spread like fire and assumed the form of global financial crisis, plunging the entire world into recession. As the economic activity slowed down, many companies collapsed and many others suffered revenue losses that forced them to resort to cost-cutting measures. It also resulted in reduced amount of work at companies, which meant that the companies did not need surplus workforce. Consequently, one of the immediate effects of the crisis was massive job cuts across industries, particularly in the developed countries of the world. The interesting dimension of these job cuts was that these decisions had ripple effects, causing many countries (as companies in these countries directly or indirectly were associated with US companies) to scale back economic activity, leading to huge job losses.

However, job cuts in India due to recession were limited as a large percentage of the Indian population was engaged in agricultural activities - a sector not affected by the global financial crisis. Yet, as the Indian IT industry was hit by the global crisis, Indian IT companies resorted to employee layoffs as a cost-cutting measure. Meanwhile, Satyam Computer Services Ltd. (now renamed as Mahindra Satyam after Tech Mahindra bought a controlling stake in the company), faced unique problems along with the global financial crisis. It was hit by an internal financial scam due to the fraudulent activities of its founder and former Chairman, B Ramalinga Raju (Raju).

HRM Review Magazine, Mahindra Satyams Virtual Pool Program, Subprime Mortgage Crisis, US Financial Crisis, Financial Services Industry, Global Financial Crisis, Indian IT Industry, Indian IT Companies, Virtual Pool Program, VPP, Economic Activities, Global Economy.