Assocham may have announced that companies will sack one fourth of their workforce but India’s top ITeS companies TCS and Infosys have assured the government of Karnataka that no retrenchment will take place in their organizations.

Ashok Kumar Manoli, principal secretary for information technology, biotechnology and science and technology of the Karnataka state government told reporters that TCS and Infosys have clarified that they would not lay off any of their employees and their future recruitments would continue.

The impact of the financial crisis on the IT sector was not alarming but the state government was keeping a close watch on the situation, he said. The state is responsible for generating about 36% of India's IT revenue.

"As far as the past six months were concerned, the growth rate in the IT industry remained stagnant at 28% but we will be able to get a clearer picture by the end of the year," Manoli said.

However R Rajalakshmi, director of STPI, Karnataka did acknowledge that the global recession will have some effect on IT and business process outsourcing (BPO) companies. According to available data with STPI, Karnataka, the state registered Rs.150 billion IT exports in the first two quarters of 2008 as against Rs.130 billion the previous year.

"Urgent measures need to be taken by the industry itself, including cost cutting. The annual IT conclave starting here Nov 6 will deliberate on the strength and weaknesses of the industry and models to redesign its entire working," said Manoli.

The conclave will bring together IT industry leaders to discuss the impact of the financial crisis on the IT sector and what steps need to be taken to tackle the situation.