Vijay Kumar, 42, is a worried man. The mid-level manager at the French IT giant Capgemini in Mumbai is currently working on a project in Europe, and he sees media reports everywhere on lay-offs in the IT industry. “I feel that many jobs are at risk,” he said. “Though there are pacifying talks by experts, and even by companies, when it comes to laying off workforce IT companies are ruthless. I draw around Rs 1.5 lakh a month as salary, and the company is likely to hire people who are willing to work for less.”
Despite reports that there will be a bloodbath in the industry because of slow growth and reducing margins, many IT companies played down the concerns. A spokesperson for Infosys, India’s second largest IT services company, said it regularly fired employees as part of assessment of performance. “Performance assessments are done with reference to the goals individuals have on business objectives and other strategic priorities for the company. A continued low feedback on performance could lead to certain performance actions, including separation of an individual and this is done only after feedback,” said the spokesperson.
Infosys’s bigger competitor Tata Consultancy Services outrightly denied any lay-offs. “We are continuing to hire, so we cannot provide any perspective on job losses in the IT industry,” said Pradipta Bagchi, senior vice president (corporate communications) at TCS.
Cognizant Technology Solutions also denied any lay-off moves. “Cognizant has not conducted any lay-offs. Each year, as is the best practice across our industry, we conduct performance review to ensure we have the right employee skill sets necessary to meet client needs and achieve our business goals. This process results in changes, including some employees transitioning out of the company. Any actions as the result of this process are performance-based and generally consistent with those we’ve made in previous years,” said a spokesperson for the company.
Cognizant cited its strong earnings in the first quarter to prove its point. “Our first-quarter revenue was $3.55 billion, at the top end of our guided range, and up 10.7 per cent year over year,” said the spokesperson. Other major players, Wipro and Tech Mahindra, did not want to comment on the topic.
Many experts say the current lay-offs are just a temporary phenomenon and there is nothing unusual about it. “Such kind of a move is nothing unusual. It happens every 3-5 years due to slowdown in the market. Currently, there is a slowdown in the market and people who are laid off are eventually able to find another job in a matter of 3 to 6 months. I feel that there is a lot of noise about this whole lay-off thing. Automation and artificial intelligence will have some impact on this, but not at a very large scale. As the economy picks up there is bound to be normalcy after some time, but, of course, the growth of IT companies will be slow,” said Mohandas Pai, former chief financial officer of Infosys.
Indian IT companies had been experiencing good growth and high profitability over the past two decades. “The ongoing automation of the support and maintenance levels were excepted to hit the industry some day. As a consequence, the industry is witnessing possible loss of jobs at L1 levels,” said Subramanyam S., founder and CEO of Ascent HR. “Further, the continued slowdown across Europe and North America, which were the major consumers of this service, whether on account of growth or disruption owing to automation would lead to a stressful experience of loss of opportunity for not just employees but also employers.” He said the industry had to rationalise its costs on manpower and should adopt more prudent practices to make business viable.
Of late, product technology has undergone massive changes, making systems easier to create and deploy. “Even a few years back, hundreds of engineers were needed to develop a basic storage stack or to configure, deploy and then maintain and run storage systems. Now, for most customers this can be done with a handful of engineers by leveraging platforms such as Microsoft Azure or Amazon Web Services,” said Sidhant Rastogi, partner at Zinnov Management Consulting.
Also, the classic basic fixed price engagement models have become uncommon. The older model of throwing a large number of junior or mediocre resources on a problem does not work any longer. “The bottom-heavy pyramid of most service providers will need to change to a more balanced one with preference to mid-level and senior talent with high technology, process or domain expertise,” said Rastogi.
Experts point out that axe will fall on mid-management level employees, as they are the ones who will be affected the most by automation. For instance, a project manager’s job can be taken over by project management tools. “New hiring will also be very selective and people will need to add on skills in the field of cloud computing and data analytics. As such, overall campus hiring has also slowed down, but there will still be requirement for programmers, coders and java professionals in IT companies,” said Amit Chandra of HDFC Securities.
Kris Lakshmikanth, founder of recruitment firm Head Hunters India, predicts that job cuts in IT sector will be between 1.75 lakh and 2 lakh a year for the next three years owing to the ‘under-preparedness’ in adapting to new technologies. “Automation has affected almost all the divisions of the IT companies,” he said. Also, the disruptive technologies such as cloud computing has made it possible for many companies to transfer their physical infrastructure to a cloud system wherein they do not require a physical network or server. “You do not require IT infrastructure managers or project managers as technology can do it much faster and efficiently,” said Lakshmikanth.
However, there will still be high demand for niche skills in areas like data science, analytics and cyber security. Arvind Thothadri, vice president of Manipal Global Education Services, said postgraduate diploma students at Manipal Global Academy for IT and Data Science in Bengaluru have been getting lucrative jobs in leading companies in these emerging technologies.