Tough IT out

The figures being given for employees to be laid off this year by the top seven IT companies range from 20,000 to 56,000. Nasscom has, however, described the number of layoffs as being ‘speculative’ and noted that industry continues to hire 1.5 lakh people annually. In any case, there is an annual performance-based system of  ‘planned exits’ in the industry which is about 1-2 per cent of the total estimated 45 lakh employees. This is expected to rise to about 4.5 per cent but even this projection is only a guesstimate for the time being.

As for the reasons for the changing vistas in this sector, the most dramatic is the decision of the new US government to review the entire system of H-1B visas. The net result will be a decline in jobs for qualified Indians in the IT sector. The other important factor behind the tumult in the software industry is the need to change direction in line with the global trend towards automation and use of artificial intelligence. In other words, where many people were needed for some tasks, now only a few will do. This will mean not just retrenchment, but also re-skilling of personnel to meet the needs of the new environment.

The IT industry is seeking to deny there is any turmoil but reports are multiplying not just of retrenchments but of delayed annual performance evaluations. This means delay in increments and promotions. There are some in industry who maintain that these upheavals have taken place in the past and are merely part of the growth process for the industry. It is also argued that the remuneration of many of those affected by the layoffs runs into tens of lakhs annually, so their fate should not be of much concern.

A major concern in this context is that layoffs should not cause social unrest. Fortunately, this is not a prospect that appears to loom large just now. But in case the situation worsens, it would be disastrous to find large numbers of highly qualified individuals languishing for want of jobs. One can only hope that the situation remains under control and that jobs in the IT sector continue to multiply, as is being assured by the industry association.

The plus point is that the big players in industry are gearing up to meet the changes in the global environment. The largest Indian IT company, TCS, for instance, is not likely to be retrenching in a big way and continues hiring at the same pace as in the past. Last year alone, it hired 40,000 employees. Infosys seems to be slowing down but to put it in context, this could be due to its own internal tumult, based on a dispute with the founders over high payouts to top-level managers.

Course corrections in the long- term strategies of Indian IT companies are inevitable. Otherwise they will not be able to survive in the altered world order. For the time being, the scenario is not so much a crisis but a turning point for industry. In the process, there may be some hardships. One can only hope that the change in strategies will work and these end up being only short term in nature.


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