IT layoffs: Situation is not that bleak but are you ready to take a cut in salary, position?

The IT industry in India is going through a churn and bleak reports of mass layoffs are the order of the day. From 10,000 layoffs at some of India’s majors like Cognizant to 2,000 at Infosys to 500 at Wipro to thousands at IBM, the list of IT companies laying off staff is getting longer and paints a grim picture.

According to Kris Lakshmikanth, Chairman and Managing Director at The Head Hunters India; and ‎visiting faculty, Institute of Management, Ranchi, the number of employees in the sector who could be losing jobs would be around 1.75 lakh to 2 lakh in the next three years.

However, there have been also reports saying these job cuts need not create panic. Japanese brokerage firm Nomura, in a research note cited by PTI, said that the job cuts of 2-3 percent of the overall headcount of nearly 7,60,000 by Infosys, Cognizant, Tech Mahindra and Wipro are not material. However, it expects the rationalisation to continue until the workforce realignment towards digital skills is complete.

Now that the job loss, which has been in the making over the last few years due to technological shifts and now exacerbated by US president Donald Trump regime's protectionist stance, has become real, the question to ask is are the people being relieved unemployable or unable to get jobs? What are their prospects of being gainfully employed in the once-sunshine industry again?

It is not as bleak a situation as it is made out to be. There are enough jobs for people in the industry still, say experts.

Representational image: Reuters

Representational image: Reuters

An analyst compares the present situation in the sector to that after the Global Financial Crisis of 2008. He reminds that the situation righted itself soon and not many continued with their unemployed status.

The situation today that is being heralded as doomsday by a section is a bit of an exaggeration, feel some. “This is a situation that India has seen earlier and we have survived that. Layoffs were certainly not in the scale as witnessed today but there are so many options for those who want jobs,” believes Harish HV, partner, Grant Thornton, an advisory firm.

When ATMs were introduced in the country in the late 80s, the biggest scare in the market was that many cashiers and accountants in the banking sector would lose jobs. Instead, banks increased their branches, remarked an analyst.

Subramanyam S, Founder- President and CEO of Ascent HR, says that the Indian IT sector has faced headwinds earlier too and despite that it has retained its technical edge and no country has been able to erode that. “The IT industry is thriving on technological skill arbitration and manpower cost arbitrage. And I don’t see any one in India with technical skills remaining jobless for long even in a shrinking economy,” he says.

With the government touting its Startup India program, one way out, say some experts, is for some of the technical personnel to get into the startup arena. “They have the knowhow and also the money – the industry paid until recently more than any other industry — and can easily be ancillaries to the organisations they worked for or any other company in the sector,” said Subramanyam.

Another much-touted programme of the government is Digital India. The recently announced demonetisation drive by the government on 8 November gave a huge push to digitisation of the economy.

With GST rolling out in July, the IT industry will virtually become the backbone of the Indian government and also of all industries in the country. “The IT sector is connected with the broad industry in ways that one cannot imagine,” said Lohit Bhatia, Director, Staffing Solutions at Ikya Human Solutions, a division of Quess Corp Ltd. Any industry from manufacturing to taxi aggregators require IT specialists or domain specialists. The demand for applications experts, professionals well-versed with data analytics, Cloud, etc will be required and hence IT professionals will be in demand.

A massive surge on account of IT with regard to GST becoming mandatory from July will open the floodgates for technology experts. GST will make daily accounting mandatory which means the need for more IT personnel across the industry will be huge, said Bhatia.

It has been noticed that the demand for contractual staffing in the IT sector has gone up for those with two years and 10 years experience. Magna Infotech, an IT contractual staffing company, has seen a 25-30 percent increase in terms of requirement for IT staff not only in small and medium-sized IT firms but also in multi-national companies, said Sanju Ballurkar, CEO.

“Salaries have not dropped and neither have they increased. But they are holding steady ranging between Rs 35,000 to Rs 40,000 for 2-year or more experienced professionals with a 9-10 year experienced IT professionals getting Rs 1.8 lakhs a month.”

The job prospects are better for those individuals who have niche skill sets which will still be in demand. For the rest, they will have to focus on skill upgradation based on latest trends in the IT market to enhance their job prospects. "The current layoffs are mainly localized to the IT services sector whereas during the Lehmann crisis they were largely across industry. The middle management IT workforce in India still has opportunities with small to mid-sized IT firms in India, technology based startups as well as in-house roles in the IT teams of many corporate organisations," said Ankit Agarwala, Director, Michael Page - recruitment firm specialising in the recruitment of permanent, contract and temporary positions.

IT professionals should be able to shift and guide their dreams to the new reality. For some, the days of drawing high salaries which were by far the best compared with any industry in the country may have changed.

But there are many options: Learn a new skill and update their knowledge to the requirement of the industry; be willing to take a pay cut and take a job in the same firm or in small and mid-sized firms; be ready to be a contract worker with contract staffing firms; be ready to relocate to other cities and take up jobs in companies that service larger IT firms in the country and globally. As Lakshmikanth of Head Hunters remarks: If you are not willing to learn, adapt, you will remained unemployed.


Published Date: May 17, 2017 11:35 am | Updated Date: May 17, 2017 11:35 am

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