India's fourth largest software exporter Satyam Computer has issued the pink slip to 400 of its employees, besides 1,500 have been put under the company's performance improvement plan. Another 3,000 have not been given increments in their last appraisal, signifying the company's new focus on its policy: shape up or ship out.

The economic downturn in the US and recession creeping up in Europe added to the volatile dollar fluctuations has hit the earnings of the Indian software companies forcing them to find ways of cost cutting, bracing itself for testing times ahead.

Company chairman B Ramalinga Raju, in an e-mail to all his employees, has warned those at the bottom of the performance scale, of strict disciplinary action.

According to reports, 1,500 employees have been placed in the performance improvement plan, which according to the company, has existed for a number of years wherein action can be initiated on the bottom-most performers to keep the organisation's efficiencies high.

These at the bottom of the scale will be given the pink slip if they fail to demonstrate their improvemnts effectively in the dummy projects assigned to them.

In the last appraisal, 3,000 of the employees were not considered for any increment thus indicating that they were expendable.

The 4,500 employees on the watch list constitute approximately 9 per cent of the 51,000 employees that Satyam employs.

Even as the company is putting a large number on the watch list who could be given the pink slip, it continues to recruit thousands, about 40 per cent of them just out of college.

Many employees have started looking elsewhere and some have even left rather than face the prospects of being shown the door.