Outplacement: A Growing Practice

DQI Bureau
New Update

Rohit Khanna, a program manager in a Bangalore-based IT firm, was not

surprised when he was asked by his seniors to participate in a meeting. He

assumed it was another of those routine meetings he was so used to.


But the meeting proved to be more than routine–sitting in the room were

members of the top management, including the HR head. As the meeting proceeded,

Khanna’s worst fears were confirmed. The CEO of the company explained how the

slowdown in business, coupled with falling topline and bottomline figures, was

exerting pressure on the company. He then touched upon the dreaded issue of

excess manpower and the need to downsize.

Just as a sickening feeling began to creep in, the HR head of the company

talked about the silver lining–the setting up of an outplacement cell that

would help employees find suitable jobs in other companies. Khanna not only got

to avail of the career counseling service at the cell, but also brushed up his

interview skills and landed a job in another IT firm... This is a hot new trend.

The rising trend


Madhavi Misra, consultant, Hewitt Associates

“How employees perceive outplacement depends a lot on how the entire process is implemented or communicated to them by their company HR wing” 

The concept of outplacement is still new in India, though this has been

practised in the west for some time now. With the slowdown moving on possibly

into a recession, many companies find it necessary to downsize their employee

numbers in line with their revised requirements, due to reduced or changed

business needs.

Abhijit Mitra of Bangalore-based People One Consulting says, "With the

integration of the global economy, India Inc is no longer immune to global

economic problems and hence the scenario of job contraction in the economy is a

real one. Companies are thus forced to let employees go due to business

realities. The hitherto sacrosanct psychological contract of job security is

today under threat".


Varghese Paul, Associate, Heidricks and Struggles feels that the concept has

not yet matured in India as a lot of companies are doing it for the sake of

formality and the market has not really accepted or matured enough for this. The

initial reaction in many companies is that perhaps the employee has some problem

and that is the reason he is being laid off and not that it is purely a business

decision. Paul adds, "A lot has to do also with the Indian culture, where

not being successful in a venture is considered shameful. But it is only a

matter of time before the market matures to accept this fact."

Polaris Software is one such organization that accepts outplaced employees

from other companies. Raja Krishnamoorthy, president, human resources, Polaris

Software feels that the credibility of the organizations involved in out—placement

of employees and also the organization accepting the out—placed employees is

crucial. Says Krishnamoorthy, ‘‘When one organization knows that the other

has good systems and is reputed, it becomes obvious that the people who are in

the ‘outplacement’ bracket of the former are of good quality. In fact, such

employee have an invisible letter of recommendation as the ‘outplacer’

already enjoys a good reputation." He adds further, ‘‘The core issue of

outplacement is that the new employer should accept the candidate as a good

performer knowing that he or she has been asked to move on due to a job


To make sure that the outplace—ment process is smooth, companies should

offer assistance to their employees. Madhavi Misra, consultant, Hewitt &

Associates feels that this assistance to a departing employee can be provided in

the form of a basket of services–from résumé preparation and interview

skills training to stress management workshops, job search strategies, skills

assessment, career counselling, financial counselling and sessions on changing

professions. Companies also need to be proactive and provide services that are

aligned to the employee needs. This would help the organization in protecting

its employer brand and make the employee transition easily.


Issues to crunch on...

Given the current economic scenario, downsizing has become the norm,

irrespective of whether it’s an old-economy firm or one from the new economy.

And while the traditional mechanism has been to let the individual concerned

leave, there are a few organizations that feel that it would be good if the

employees got a chance to land a job elsewhere. It is here that outplacement

enters the scene. And while some companies outplace employees themselves, others

go to the extent of hiring outplacement agencies for this job.

According to Paul, ‘‘The outplacement process to identify companies, fix

interviews and get jobs should be done by external agencies which should also be

able to talk to the employees and boost their confidence so that they can do

well in their interviews." The companies on their part need to define the

process or understand the external agency’s process closely. They also need to

help the agency in its job. ‘‘For example HR heads of the outplacing

companies can have a word with their counterparts in the company that the agency

has identified. Communicating the issue to the employees involved is also very

critical issue,’’ Paul adds.


‘‘Communication and Control are in-house issues and as such they should

be handled within the organization. The Counselling and Care aspects can be

outsourced to an external agency specializing in the same. The organization may

not have the skills internally to handle the aspects of counselling and care,’’

explains Mitra. Agrees Misra, ‘‘How employees perceive out—placement

depends a lot on how the entire process is implemented or communicated to

them." Adds Paul, "It also crucial that the out—placement agency

understands the organization and have people well trained to handle the process.

The company and the outplacement agency need to work closely to ensure


Do’s and don’ts

Raja Krishnamoorthy, HR chief, Polaris Software

“These people are attempting to be ‘outplaced’ with an invisible letter of recommendation, as the ‘outplacer’ already enjoys good reputation”


While the absence of clear communication strategy may create apprehensions

amongst existing employees and the wave of insecurity may bring down

productivity, there are other issues too. Breaking the news of outplacement and

how is a big issue. Organization’s also face a tough task deciding who should

do the so-called dirty job. Also, do organizations need to take other employees

into confidence?

Paul suggests that the immediate boss who works closely with the concerned

employees and in most cases have the best rapport with them should be the right

person to convey the news to them. However, he cautions that all such bosses

need to be sensitised to the situation and break the news to their subordinates

in a one-to-one meeting. ‘‘There are lots of dos & don’ts to be kept

in mind. Never blame the company or say that ‘I understand’ because one can

never understand what an employee might be going through and the problems that

he might face," he adds.

It is also necessary that other employees should be told that certain

decisions have been taken and the business reasons for doing so. Clear

communication about future plans would also go a long way in assuaging the

employees concerns. ‘‘The absence of such communication may bring down

productivity and instigate existing employees to quit at the first available

opportunity," Paul explains.


The employee concerned should also be allowed to use the facilities and

company premises in the interim period before outplacement. A month’s notice

is advisable besides use of resources such as email that would help them in

finding jobs. According to Krishnamoorthy, "It is the moral, human

responsibility of every company worth its salt to ensure that if it is required

to outplace a certain group, then due effort has to be made to ensure a smooth

transition. Proactive approach is not just called for it should be


While lot of words can be exchanged on whether outplacing and downsizing are

two sides of the same coin, experts suggest its not. Downsizing may be triggered

by the need of the organization, outplacing is an attempt by the company to

ensure that its really good human resource do not suffer because of the problems

faced by it. For organizations that are unaffected, this may in turn be an

opportunity to find trained and competent people easily at a time of distress.

A win-win strategy in not such a win-win situation, isn’t it?

Amit Sarkar in New Delhi  with

inputs from G Shrikanth in Chennai