Why Layoffs in Indian IT Sector?

Posted on 05th Jun 2017 | 1187 views

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Technological advancements like automation and digitization are going to affect the careers of IT professionals in the IT and telecom industries. As there will be more impact on mid level and senior level professionals with 5-15 years experience and 20 lakhs package. However, newer technologies in artificial intelligence (AI), robotic process automation and cloud computing jobs takes less manpower help as many IT biggies to reconsider their strategies to keep with the changes in the industry.


Recent reports mentioned that half of Indian workforce in IT sector will be treated as irrelevant unless they are re-skilled or adapt the new technologies. Indias largest IT services companies are planning to layoff at least 57,500 engineers this year.This number may increase in coming years. Layoffs will be more in Tier I and Tier II cities.

What is the level of layoffs? While the IT industry is shifting towards the digital technologies and automation, as that a majority of the workforce cannot trained with the required skill-sets, and warned of high job losses at middle and senior levels. Out of the 24 lakhs employees, only about 50 percent, or approximately 12 lakh, can be re-trained and about 6 lakh can manage with existing skills. The rest, approximately 6 lakh professionals will lose their jobs over the next three years. However, preparing the ground for layoffs, many IT companies have already put a higher number of employees on notice by awarding them the lowest ratings in appraisal process. Major IT companies in India are looking to implement cost cutting strategies by laying off more employees with high salary packages on account of a more rigorous performance evaluation process. The number is at least twice the employees laid off by the companies last year, reflecting their under-preparedness in adapting to newer technologies and dealing with the fallout from US President Donald Trumps protectionist policies.

Why layoffs? While, on average 4.1 million IT employees come from low-grade engineering colleges which do not follow rigorous grading patterns for students in their zeal to maintain good records. Recruitment experts opined that the quality of the students is so bad that many of them are not able to answer even questions from subjects taught in the final semester. Recent study revealed that nearly 81.5 percent of engineering graduates are unemployable. Companies are laying off mid level and senior level employees with 5-15 years of experience professionals for the roles such as team leads, programme manager, supervisor or engineering managers to hire freshers who come at a cheaper cost. Effect will be on mid and senior level professionals as they should retrain themselves in the new technologies in order to save from the automation. IT companies are giving Pink slips for the jobs in manual testing, technology support and system administration since these are increasingly going to be managed by AI and robotics process automation based systems. Recruiting experts believed that it is a challenging task that nearly 60-65 per cent of them are not trainable, as Indian IT sector will witness the largest unemployment in the middle level to senior level grade.

Conclusion: However companies continue to invest in developing and up-skilling internal talent to take on better jobs while driving a strong performance culture. It is also an opportunity for IT professionals to upgrade themselves and get into the new-age technologies where demand will be huge. Industry body NAASCOM stated that layoffs number is exaggerated as there were no mass layoffs in the IT industry. It was a regular process of manpower realignment during the appraisal process, now focus is shifted from scale to skill.

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