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Indian IT Prepares for a U.S. Recession

Tata Consultancy Services has cut performance-linked pay for its workers, and engineers at other companies could face pay cuts and layoffs
An engineer at Wipro, India's No. 3 software exporter.
An engineer at Wipro, India's No. 3 software exporter.

Are the pink slips arriving for India's tech engineers? Reeling under the triple burden of high wages, a U.S. economy seemingly headed for recession, and a rising Indian rupee, the country's tech firms are taking steps to prepare for tougher times. Suddenly, Indian engineers who have grown accustomed to ever-rising salaries and expanding workforces are facing wage cuts and layoffs.

On Jan. 28, Tata Consultancy Services, India's largest software company and the largest private-sector tech employer, informed workers that it would snip 1.5% to 2% of the performance-linked portion of their pay starting in February. Meanwhile, multinational rival IBM (IBM) is laying off 700 of its Indian engineers. With companies such as Infosys (INFY), Wipro (WIT), and Satyam also vulnerable to a U.S. slowdown, similar announcements could follow.