Prolonged lockdown may result in IT industry job cuts; pose huge challenge for startups, says ex-NASSCOM chief R Chandrashekhar

The former bureaucrat also said startups which are surviving on funds infused by venture capitalists may face tougher situations if the present scenario deteriorates

Press Trust of India April 13, 2020 08:57:39 IST
Prolonged lockdown may result in IT industry job cuts; pose huge challenge for startups, says ex-NASSCOM chief R Chandrashekhar

Hyderabad: Indicating that prolonged lockdown to contain coronavirus spread may lead to job cuts in the Indian IT industry, NASSCOM former president R Chandrashekhar has said that the work-from-home culture may become a positive development in the long run as it opens up newer avenues and save investments by IT firms.

The former bureaucrat also said startups which are surviving on funds infused by venture capitalists may face tougher situations if the present scenario deteriorates.

"The larger companies may not be actually cutting jobs for two reasons," he said. "One is that they do not want to lose their employees and they have money to pay."

"Many of them [big companies], even if they do shed some jobs it might be at the [level of] people who are the temporary or intern type. But they would not want regular and permanent employees to go. So as long as they have sufficient flexibility in their books, they would continue. But beyond a point that it goes on, for let us say, two months or three months, then even for them, they will feel the pressure. They may not just keep on providing subsidies to the employees."

"So the key question will be how long that goes on," Chandrasekhar told PTI.

Prolonged lockdown may result in IT industry job cuts pose huge challenge for startups says exNASSCOM chief R Chandrashekhar

Representational image. Reuters.

He said the work-from-home systems being adopted by several firms across the globe, including India, may have a negative impact on the industry in the short-term, but in the long run it would change the work culture which hitherto was not experienced by many of the IT firms in India.

According to him, the work-from-home, in the long-run results in savings in terms of employee productivity, logistics cost and office space. He said client companies offering contracts to Indian IT firms, which are also undergoing similar experiences, may not object to work remotely.

"Human behaviour (adapting work-from-home culture) changing is not easy. This coronavirus has forced us to change faster than we were changing", Chandrashekhar said.

On the impact of the prolonged lockdown on startups, he said it would be a big challenge for the budding enterprises as the investments they get are based on their ideas and future revenues and the present situation under which peoples movement is curbed may shackle their progress. Where will they (startups) get money to pay salaries to their employees," he asked.

Venture capital investors would not pay the money or invest their money to pay salaries because they are not in the charity business, he said, adding that if the employees are not paid and if they then leave, it is difficult for the startup to come back up. "So the whole investment plan goes for a toss," he said.

Founder of a mid-sized IT firm said the job cut in the IT industry is inevitable even for bigger firms if the present situation across the globe continues for a few more months.

Former chairman of NASSCOM, B V R Mohan Reddy said a clear picture as to what is going to happen has not yet emerged as the situation with all respects is still evolving. Reddy said there will be a demand shrinkage for the IT industry as the entire world is under stress.

"There is no economy in this world that is going to do well in this situation. All of them are in some form of stress. So, therefore, there will be a demand shrinkage," he said, indicating tougher times for the industry ahead.

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