Chennai rains may impact IT firms in December quarter

Chennai is the second largest base for IT companies in the country.

In a quarter with fewer working days for information technology (IT) companies, owing to the long holiday season towards the year-end, the rain deluge in Chennai is an added woe.

Though most of the companies have business continuity plans, primarily to staff projects requiring round-the-clock support, a majority of the works have been impacted by the flooding of campuses in the city.

Chennai is the second largest base for IT companies in the country.

It houses almost all the top-tier IT service companies, beside global ones like IBM and Accenture.

There are umpteen numbers of small and midsize IT and business process outsourcing entities with a base in the city, owing to easy availability of talent and relatively cheaper real estate.

“In view of the situation resulting from incessant rain in Chennai and the meteorological department’s forecast of more heavy rain, Cognizant offices in Chennai are closed today (Wednesday). However, there is no disruption to work on critical projects and 24x7 operations support. We have activated our business continuity plan and continue to closely monitor the situation,” said a spokesperson. Nasdaq-listed Cognizant alone has around 60,000 employees across 11 facilities in Chennai.

“In light of the rains and flooding in Chennai, Infosys campuses in the city were closed on December 2 and we have also declared a holiday on December 3,” said the country's second largest IT services company.

Infosys has two facilities in Chennai, one at Sholinganallur and another at Mahindra World City which employs around 17,000.

“Our business continuity plans have been activated and we have taken necessary action to ensure client commitments are met, which includes managing work from other locations,” the company added.

For India’s export-driven IT service companies, which primarily earn their revenues by billing global clients on a per-employee, per-hour basis for the software coding services they offer, loss of a business day impacts performance.

Most of the top-tier companies in the sector, including Infosys and Wipro, have sounded a caution for the October-December quarter, in anticipation of extended client furloughs and less working days.

Besides, the Q3 (Oct-Dec) quarter has also been traditionally weak for Indian IT services entities, as clients start evaluating their budgets for the next year, expecting a delay in project kick-ups and completion.

Apart from ensuring business continuity, the IT companies are also taking steps to ensure facilities to those either stranded in offices or having preferred to stay back, by providing food and accommodation.

“IT companies tend to have a business continuity plan which ensures work does not get affected because of natural calamity. In many of the contracts, clients are accommodative for (such) events...There could be some minimal impact in a quarter which is already getting affected due to lower number of working days,” said Shashi Bhusan, senior vice-president at IDFC. “If the rain and flood continue for a longer period, the impact can be assessed over the next five to 10 days.”

“We are closely monitoring the evolving situation in Chennai. Our staff at Sholinganallur have taken complete ownership to ensure the safety and wellbeing of our employees and assets. In addition to accommodation in hotels, special boarding arrangements have been made for those employees who have opted to stay back at the campus. Food and other essentials are being provided,” stated Wipro.

HCL Technologies has around 30,000 employees in Chennai across eight offices.

It said the company was giving utmost importance to employee safety and security. “(We) have well- defined business continuity processes...we continue to monitor the on-ground situation closely,” the company said.