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Tech Mahindra Lowers Retirement Age of Employees

Corporate and government retirement ages typically go up, as populations live longer. But in the rapidly changing IT industry, it’s beginning to go down.

Tech Mahindra has reduced the retirement age from 58 to 55 years, indicating they don’t want to be stuck with older employees who may be reluctant to change. The policy applies only to employees in what it calls the ‘U’ band — those with under seven years of experience. The policy has no impact for now, and its senior employees will not be hit.

The impact comes only if one of the younger employees of today chooses to stay a long time in the company. The move is significant right now only in the signalling that India’s fifth-largest IT services firm is doing. It expects tech to continue to be the vanguard of changes, and it expects that employees will become less reluctant to change as they age.

CTS offered VRS to over 400 senior employees last yr

Across the tech industry, the dramatic technology changes are compelling companies to find ways to show older employees, and less agile employees the door.

Unmesh Pawar, partner, head – people, performance & culture in KPMG India, said the disruptions owing to tectonic shifts in technology are changing how organisations are looking at their talent operating models. “Performance processes have been reinvented to factor in skills of the future, recognise and reward talent that displays change agility to respond to the market needs,” he said.

Last year, Cognizant Technology Solutions (CTS) had offered a voluntary retirement scheme to over 400 senior employees. In August it said it will incur $35 million in severance cost through the rest of the year.

Verizon Communications recently announced early retirement plans for executives and managers. The Register reported last year that IBM floated a voluntary separation programme for its global tech services staff in the UK.

A ProPublica report published in March said IBM has cut 20,000 jobs in the US especially employees who are aged over 40 years in the last 5 years. Employees are crying foul for what they describe as age related discrimination.

“At the end of the day, business-and-skill mix required has changed dramatically. Companies have engaged their employees in long learning cycles — in some cases, at their own expense. Firms have little control and are driven by clients’ demand and are actively changing the skill mix. With customers wanting to reap higher productivity gains, the project pyramid is getting squeezed, forcing companies to rationalise costs and embark on redundancy plans without the noise,” said an industry source.

Source: TOI