Layoffs In Indian Information Technology Sector May Continue For 1-2 Years, Experts Say

As digitisation and automation become the new normal, information technology biggies like Infosys Ltd., Cognizant Technology Solutions Corp. and Tech Mahindra Ltd. are seeing a spate of layoffs and this trend may continue for the next 1-2 years, say experts.

The pink slips are being handed out to thousands of employees as part of their performance appraisal process, but it is believed that these are directed more towards cost control amid pressure on bottom line due to a rising tide of protectionism in most target markets.

Indian software exporters in particular are facing headwinds in the business environment and stricter work permit regime in countries like the U.S., Singapore, Australia and New Zealand. Moreover, with newer technologies in artificial intelligence (AI), robotic process automation and cloud computing, which help complete the job with less manpower, software companies are now having to reconsider their strategies.

“It’s a situation wherein the available talent haven't kept up with the pace at which the industry was evolving and hence, many of them find themselves redundant,” said Rituparna Chakraborty, executive vice-president and co-founder, TeamLease Services.

Executive search organisation GlobalHunt Managing Director Sunil Goel said: “This rationalisation does happen in every 3-5 years in the industry through new-age technologies, but this has impacted it more this time as the US also has changed policies for foreign IT workers.”

Goel further noted that “the consolidated trend may continue for next 1-2 years,” but sees it as an opportunity for IT professionals to upgrade themselves and get into the new-age technologies where demand is going to be huge.

Pink slips are likely for 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. However, there is surge in demand for latest and innovative technologies like data science, artificial intelligence and digital domain specific skills.

“It is a painful transitory phase. However, things would look up in the next two quarters as each of the IT. services company successful steers towards a stable growth phase,” Chakraborty said.

Talent management solutions provider KellyOCG India Country Director Francis Padamadan said, “We will continue to see some amount of rationalisation happening among IT companies though it is difficult to put a number.”

Japanese brokerage firm Nomura, in a research note, 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, this kind of rationalisation is likely to be a continuing phenomenon until the workforce realignment towards digital skills is complete.