What Lies Ahead For Indian IT As Layoffs Loom?

by Moumita Deb Choudhury    May 12, 2017

job cut

It’s not that the grotesque outcome of the stringent visa rules and increased automation could not be sensed, but an impact so huge that IT services biggies would go in for a spate of layoffs larger than the global economic downturn of 2008, was something that perhaps is a sting too harsh to bear.

Further, the $150 billion industry witnessed its slowest growth in a decade. While Indian IT companies are required to hire more US workforce, global firms are shifting their budgets from traditional IT services are moving to automation, increasingly taking over low-end maintenance work, forcing companies to slash jobs to such an extent that it has left many eyebrows raised.

This has spurred controversies as the laidoff workers approach state governments and labor unions to intervene in the matter. It is interesting to understand, what lies ahead for the country’s much-acclaimed IT sector that was expected to be around $1 trillion opportunity in next 5-7 years and has potential to contribute 25 percent of India’s GDP. 

IT Industry’s Version:

Most of the companies said that layoffs happen each year, some of them conduct it on a bi-annual basis and that the parameters and numbers are different each time basis the situation.

Nearly 1000 employees in job level six and above which includes group project managers, project managers, senior architects and higher levels are expected to be shown the door.

“A continued low feedback on performance could lead to certain performance actions, including separation of an individual and this is done only after feedback. We do this every year and the numbers could vary every performance cycle,” Infosys said in a statement.

Last week Cognizant announced a voluntary separation program for the directors, associate VPs and senior VPs. Around 1000 executives are expected to leave. The company is expected to eventually let go of at least 6,000 jobs or 2.3 percent of its total workforce.

Wipro CEO Abid Ali Neemuchwala in an internal conference call in March this year expressed that the company with an employee base of 1.81 lakh employees could cut off 10 percent of its workforce this year if the revenues do not grow.

“It’s across service lines…performance appraisal is nothing new. I don’t know which conference call you’re talking about, but I have a conference call with my leadership team every month and I go through a lot of items. There are to-dos in every quarter. We have done away with the bell curve. Today, the performance measurement is not on what you were doing till yesterday, but whether you are ready for tomorrow,” TOI quoted Neemuchwala as saying.

French IT services major Capgemini is also considering large scale layoffs, according to a TOI report. While the report said that the company would lay-off 9000 employees. Capgemini said that it has not announced any plans of layoff and expects to recruit more than 20,000 new team members in India this year, reports inditavnews.com.

“Each year, our employees are evaluated based on strict performance criteria in an objective process, consistent with industry norms, to ensure we are aligned with our customer needs, business priorities, and the overall industry evolution. This leads naturally to a varying number of employees transitioning out of the organization in any given year,” inditavnews.com quoted Capgemini.

“We are highly committed to continuous talent development and building the capabilities of our employees to help them stay relevant. We continue to accelerate our training programs in 2017 with over 2,000 India employees having already undertaken up skilling and emerging technologies training alone,” a senior spokesperson said.

Worker’s version:

Those who are on the side of the laid-off workers are of the opinion that the firing policies based on the performance reviews are often discriminatory. Stability of job in the IT sector is very feeble. At times, it seems that the companies come together to keep the salaries down. The employees most of the time are not able to voice their concern as that would affect their chances of finding a new job. They say such matters cannot be left only within the periphery of the employer.

How the law Sees it:

The law does not prohibit the from forming unions in the IT sector. Last year we saw that after the TCS laid off a number of employees, the Tamil Nadu government clarified that the IT/ITES industry was covered by the Industrial Dispute act. In 2007, also the central government said that the IT/ITES industry falls under the labor laws and it for the state government to handle the situation in case of violation of these laws.

However, mostly, employees refrain from fighting with the employer as it can tarnish the career of the workers who would then find it difficult to find a job elsewhere.