SYSTEM CRASH

The global tech industry, which went on an expansion spree during the Covid-19 pandemic, is now beset by a massive layoff wave, adding to the jobs crisis

For the past seven months, Pavan (name changed), a BTech graduate from Mohali, has been waiting for a call or an email from a leading Indian IT company. The 23-year-old was selected for the role of associate software engineer, but there has been no communication since then. He got through another MNC, but the firm soon informed him that it was halting its recruitment drive. With an education loan to repay, he is now working at a BPO.

Pavan is not alone—many of his own colleagues are in the same boat as the global tech industry faces a bloodbath. Ironically, with a 5 millionstrong workforce, the tech industry in India till very recently was on a roll, with an unprecedented expansion spurred by the Covid-19 pandemic. During FY22, the top four Indian IT services firms—Tata Consultancy Services (TCS), Infosys, HCL Technologies and Wipro—together added around 240,000 employees. High salaries were on offer, firms were poaching employees; just a few months ago, concerns were being raised about ‘moonlighting’, i.e., employees taking on side gigs.

Then, things came crashing down. Starting with the US in November last year, big firms such as Amazon, Twitter, Meta and Salesforce began announcing layoffs in the thousands (see A Brutal Winter). “There definitely is turmoil,” a senior IT hand in New York says about the job losses among the Indian expat community there. “Every week, along with the [earnings] announcements comes the bad news … There is turmoil because if they don’t find a job in the next 60 days, their visas become void and they have to return.”

Back home, home-grown startups have already started downsizing. Reportedly, in just the first two weeks of this year, at least 11 Indian tech start-ups—including names such as ShareChat, Dunzo and Ola—fired about 1,400 employees. Even the big IT services players, which dominate tech sector hiring in India, are slowing down intake. The top four IT companies in India added only 1,940 employees between them in the October-December quarter last year as compared to 28,836 in the July-September period. From over 80 per cent in March 2022, the IT sector’s contribution to active white-collar jobs in India dropped to a record low of 40 per cent in January this year, according to Bengaluru-based specialist staffing firm Xpheno. “I won’t call it a [hiring] freeze as enterprises are hiring for attrition refills...there’s no expansion hiring per se,” says Kamal Karanth, co-founder at Xpheno.

Companies are slowly re-strategising for the post-Covid scenario, with a focus on utilising excess capacity. During a recent TCS earnings call, CEO Rajesh Gopinathan said the firm should be back to a “more normal kind of hiring trend”, having hired significantly ahead of its revenue growth in 2021. The picture varies across companies in the Indian tech industry, which includes startups, product firms and global captive centres. “This quarter, we have a hiring freeze as well as a restriction

on promotions,” says a manager at a Bengaluru-based MNC. In a recent survey of around 500 tech clients, Randstad India reported that 4-5 per cent of them were on a hiring freeze and 2 per cent had adopted a strategic layoff plan. The rest, while slowing down on hiring, are in wait-and-watch mode.

Overall, however, some experts are of the opinion that India may be able to buck the global trend as the ongoing digital shift drives demand for tech talent. “We have seen layoffs as well as extensive hiring across levels to meet altered business goals,” says Yeshab Giri, Chief Commercial Officer, Staffing & Randstad Technologies. Karanth of Xpheno reckons that India may still see around 600,000 jobs added this year. The rationale is that large IT services companies can’t afford to stay away from the hiring market for more than two quarters as it would impact their talent supply chain and operations.

The recently announced Union budget offered some relief to start-ups while also keeping its focus on new-age skills for employment. Startups have been provided with a one-year extension of tax benefits (up to April 2024) and can carry forward losses to 10 years from incorporation, as against seven years at present. The finance minister has also announced the setting up of open-source, digital public infrastructure for agriculture and an accelerator fund to encourage agri start-ups by young entrepreneurs in rural areas. Additionally, on the cards are a National Data Governance Policy, aimed at enabling access to anonymised data for start-ups and academia, and three centres of excellence for Artificial Intelligence (AI) to be set up in top educational institutions. Meanwhile, the redesigned government flagship skill development programme, Pradhan Mantri Kaushal Vikas Yojana 4.0, will cover courses for coding, AI, robotics, mechatronics, IoT, 3D printing and drones.

“The finance minister’s announcements, especially in encouraging priority sectors and high-impact clusters, are encouraging. Centres of excellence in emerging technologies like robotics and AI will hopefully further fuel deep-tech startups,” says Anand Sri Ganesh, Chief Operating Officer at IIM Bangalore’s business incubator, NSRCEL. Ganesh, however, also points out that the budget did miss an opportunity to “ignite a dampening startup funding ecosystem, especially debt funding for asset-light and early-stage innovation”.

Nonetheless, India’s digital evolution, with growing internet penetration and the arrival of 5G technology, is expected to create ample employment opportunities, says Giri. Fields such as data analytics, data visualisation, data science, full stack development and cloud & DevOps will drive the demand for tech skills through 2023. “Having said that, with the growing demand for tech skills in a young and densely populated country like India, the job market is definitely going to be extremely competitive,” Giri adds.

In any case, the Indian tech industry must not drop its guard as the storm clouds gather. ■

THE RECENTLY ANNOUNCED UNION BUDGET HAS OFFERED SOME RELIEF TO STARTUPS WHILE ALSO KEEPING ITS FOCUS ON NEW-AGE SKILLS FOR EMPLOYMENT