No Fire In IT Hires
- Hiring is down to 1.5 lakh annually from 3 lakh per year four years ago
- Higher productivity due to automation, cloud, robotics and AI is reducing manpower requirement
- Industry is growing at 7.6 per cent, but jobs at only 5 per cent
- At least 20 per cent of India바카라s IT professionals are job-hunting at any given point of time
***
A 26-year-old software engineer who was recently asked to resign from a top software services firm is these days figuring out how the tech world around him has changed. He바카라s still smarting from the loss of his job, which he joined less than a year ago, and feels it was unfair as he only got to work on a project for about four months. Apparently, he had been placed in the lowest rating, moved to 바카라non-billable바카라 and then, in April, was given the choice of taking four months바카라 salary to quit immediately or serve out a notice period.
Elsewhere in Bangalore, an experienced hand at a software services firm recounts how his project supervisor gradually stopped talking to him and the mental pressure started building up. 바카라If you are working for 11 years and your performance was fine, it suddenly can바카라t go wrong in a day,바카라 he says. 바카라The ratings were fine for the past quarters. Slowly they created an environment where I was not able to work.바카라 During appraisals, he was told his performance was not good. It바카라s a story he has heard from others too. He is now looking for a new job.
In the past few weeks, the beleaguered IT industry has been getting some undue attention바카라not because of big client acquisitions or its growth rates, but because of mass layoffs in the sector often touted as a harbinger of job-creation in India. According to media reports, the top seven IT firms will lay off over 50,000 of their employees바카라significantly more than the number last year. Cognizant, Wipro, Infosys and Tech Mahindra are learnt to be reducing their staff. For the first time ever, Cognizant has reportedly launched a voluntary separation scheme for its senior employees.
There바카라s a fair bit of anguish among India바카라s IT services employees this appraisal season and the dream job that transformed most of India바카라s middle-class families for the past two decades has changed in many ways. Companies deny they are laying off people, but there바카라s certainly a churn that probably didn바카라t seem so amplified even during the 2008 recession.
The IT sector has indeed been going through tough times with growth rates plummeting and most of the top companies taking a hit on their bottom lines in the last two quarters. In fact, the guidance given by leading companies like Infosys points mostly towards single-digit growth in the coming year바카라a far cry from the robust double-digit growth the sector is used to achieving. Looking at the bleak prospects, industry association Nasscom is yet to give a growth projection for the current year. The $150 billion IT industry is expected to record an estimated six to eight per cent growth in the current year, while it may be as low as four per cent for some top firms.
The current spate of layoffs may be a result of this downturn, which is mostly due to a change in the work model that confronts IT companies as the world moves on to digital technologies. The sector was ill-prepared for it. Recruitment has come down noticeably. Known to be the largest employer in Indian industry, the IT sector used to hire around three lakh people every year four years ago. Now it recruits just 1.5 lakh people annually. Earlier, the rate of growth in the sector matched the rate of growth in recruitment, but now, while the industry is growing at around 7.6 per cent, headcount is growing by just 5 per cent. 바카라The linearity between revenue growth and manpower growth has disappeared,바카라 says B.V.R. Mohan Reddy, founder and executive chairman of Cyient. 바카라Automation, cloud and disruptive technologies have brought down manpower requirement significantly.바카라
Industry watchers will tell you that the writing on the wall was clear even a couple of years ago, on account of several factors. 바카라In the recessionary period, the whole market was down. That is not the case today. Financial services companies, manufacturing and some high-tech verticals are actually spending money,바카라 says Sudin Apte, CEO and research director at Offshore Insights. 바카라It바카라s the first time there is a mismatch between what clients are looking for and what Indian IT has to offer. That gap is widening.바카라 Acknowledging it is difficult for these companies바카라with lakhs of employees on their rolls바카라to navigate the scenario, especially when a lot of custom development work they used to do is now being offered by newer rivals on a pay-per-use basis, he says, 바카라That바카라s the challenge. What was historically a service business has shifted to cloud or SaaS (Software as a Service) business.바카라
At the moment though, most of the IT companies in India, including Infosys, Wipro and IBM, are clearly in denial. They say there have been no layoffs in their companies and the downsizing of their staff is not drastically different from what they did in previous years. Nasscom is also trying to play down the phenomenon. Some analysts also feel that the layoffs issue is getting exaggerated. They argue that while the industry바카라s total workforce is 4 million, even if 50,000 people were laid off, it would amount to less than two per cent of the workforce.
In a statement issued earlier this month, Nasscom said, 바카라The industry continues to be a net hirer with over 1.5 lakh people being employed on a net basis each year, though the focus is shifting from scale to skill. In fact, talent and skills are the key building blocks for the industry, which is intensifying investment in skilling/re-skilling its workforce to strengthen its foundation on a continuous basis. Additionally, workforce realignment linked to performance appraisal processes is a regular feature every year. Skilling and workforce realignment are essential to remain competitive in international markets.바카라
Experts, however, feel that the layoffs are a reality in the IT sector and are happening because there is a significant change in the business models and the delivery model of the firms바카라 clients. 바카라The Indian IT industry is going in for a major transformation,바카라 says Raja Lahiri, partner at Grant Thornton India. 바카라There is a significant amount of big data, cloud and analytics, which is changing the delivery model to clients. In my view, this would bring in more change as we move forward. The quantum and skills of people required to deliver solutions to clients would, therefore, be different from the past and this would impact manpower deployment in terms of quantum as well as type of skills.바카라
Further, the rise of artificial intelligence (AI) and robotics will also change the manpower deployment and skills required. Moreover, the H1B issue in the US along with the changes in the IT industry delivery models would mean changes in manpower deployment strategy (in terms of quantum and skill sets) for Indian IT players.
Jaideep Mehta, managing director (South Asia) of IDC, feels that the foundational reason for the current development is the industrialisation of the IT sector. The industry has moved from being a cottage industry to the level of a mature industry. 바카라Now a lot of things are consumed readymade. Cloud is a key manifestation of this phenomenon. For many companies, instead of setting up fresh infrastructure, they can now rent it on the cloud. Many software, for example, accounting systems, have also changed from bespoke systems with companies to packaged software,바카라 he says. This is reshaping the way IT is consumed, forcing dramatic business model transformation. For example, in digital projects, it is about small teams working onsite on projects. When you add automation technologies, the IT industry would need significantly lower number of people for the same task.
The new systems are also becoming people-savvy and demanding increased skill levels from workers. 바카라This is around lean processes and automation, which is making workforces more productive and reducing manpower requirement,바카라 says Arvind Thakur, CEO of NIIT Tech. 바카라Automation is changing job roles in all industries, not just IT. It will lead to more jobs in the long run. But those would be different kind of jobs.바카라
That바카라s true. Take the case of a Bangalore-based employee at an IT firm, whose team would earlier resolve some 10,000 events바카라for example, database not working or a server glitch바카라but over the past year, since automation kicked in, they have needed to handle only about a third of that because of intelligent systems.
There are more problems for IT companies. According to a paper by Ambit Capital, Indian IT firms are facing margin headwinds from US protectionism, strong INR and persistent pricing pressure. As employee cost바카라the wage bills바카라is the single-largest cost for Indian IT companies, this has borne the brunt of the cost-cutting pressure. 바카라In 2017, we are hitting a perfect storm,바카라 says Shantanu Paul, co-founder and CEO, Talentsprint. 바카라Indian industry has woken up to the fact that growth is not going to happen. So they cut manpower to cut costs. About 60 per cent of the cost of the IT industry is from wage bills. The bloodbath has just begun and will get tougher as we go forward.바카라
Last week, a handful of Cognizant employees, banding together with the Forum for IT Employees (FITE), approached labour department officials in Hyderabad with a petition about terminations that they said were illegal. 바카라They are calling it voluntary attrition. But it is not voluntary, right? Those people were forced to resign,바카라 says a FITE member from Bangalore. Back in 2014, the forum made news when it rallied together employees from TCS in a similar situation.
바카라Cognizant has not carried out any layoffs,바카라 says a spokesman for the US-headquartered firm, adding that the performance review each year results in changes, including some employees transitioning out of the company. 바카라Any actions as the result of this process are performance-based and generally consistent with those we have made in previous years. We continue to hire and invest in critical skills to support our evolving digital capabilities. In the March 2017 quarter, we hired thousands of professionals바카라top talent from campuses as well as from the lateral market. We are continuing to enhance our capabilities for roles across all our practice areas and expanding facilities globally. We retrained and re-skilled tens of thousands of employees in 2016, and we expect to have about 100,000 employees retrained by the end of this year in the most specialised areas of digital.바카라
A spokesman for Infosys says much the same thing. 바카라There are no layoffs at Infosys. The separations taking place are related to performance,바카라 he says, adding that the firm carries out a bi-annual assessment of performance. 바카라As part of this regular process, 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-based actions, including separation of an individual, and this is done only after feedback.바카라
Wipro also said it undertakes a rigorous process of performance appraisal on a regular basis, which is done to align its workforce with the business objectives, strategic priorities and requirements of clients. This performance-evaluation process triggers a series of actions like mentoring, retraining and upskilling. The performance appraisal may also lead to some employees being asked to leave바카라what the Infosys spokesperson referred to as 바카라separation of individuals바카라.
바카라With the IT industry undergoing a transformation, rationalisation of workforce was expected,바카라 says D.D. Mishra, research director at Gartner. 바카라Many Indian IT companies have increased their share of digital business revenue and are shifting from traditional to more non-linear modes of operation. The regulatory changes in the US and elsewhere are catalysts for some of these changes. IT companies will now have to change their gears.바카라
The next two to three years are going to be quite challenging for the industry and downsizing is likely to become the norm across the sector. Mehta feels layoffs are inevitable, but it is only the start of the journey and will accelerate as we go through the quarters. Companies are finally recognising the need to transform themselves and get re-skilled to face the challenges from automation, cloud and artificial intelligence. If they don바카라t, they will lose relevance in as quickly as three to five years.
By Arindam Mukherjee in Delhi and Ajay Sukumaran in Bangalore
