Head Hunters India Founder-Chairman and Managing Director K Lakshmikanth
Executive search firm Head Hunters India says the job cuts in IT sector will be between 1.75 lakh and 2 lakh annually for next three years due to underpreparedness in adapting to newer technologies. "Contrary to media reports of 56,000 IT professionals to lose jobs this year, the actual job cuts will be between 1.75 lakh and 2 lakh per year in next three years, due to underpreparedness in adapting to newer technologies," Head Hunters India Founder-Chairman and MD K Lakshmikanth told PTI, analysing a report submitted by McKinsey & Company at the Nasscom India Leadership Forum on February 17. McKinsey & Company report had said nearly half of the workforce in the IT services firms will be "irrelevant" over the next 3-4 years. McKinsey India Managing Director Noshir Kaka had also said the bigger challenge ahead for the industry will be to retrain 50-60 per cent of the workforce as there will be a significant shift in technologies. The industry employs 3.9 million people and the majority of them have to be retrained. "So, when we analyse these figures, it is clear that 30 to 40 per cent of the workforce cannot be retrained or re-skilled. So, assume that half of this workforce can continue to work on old skills, then balance will become redundant. "So, the number of people who will become redundant in the next three years will be about five to six lakhs. This will workout to, on a average, between 1.75 lakh to 2 lakh per year for next three years," Lakshmikanth explained. However, he said job cuts will not take place in major cities like Mumbai or Bengaluru, but cities like Coimbatore or a few remote places, he said. Lakshmikanth further said the IT services industry is passing through an uncertain time as the growth in digital technologies like cloud-based services is happening at a much faster pace and
the companies are combining learning of some of the new technologies and reskilling. "Because of the changing technology, the most affected will be the professionals aged 35 and above, for it would be very difficult for them to get jobs," Lakhsmikanth said. Asked if it is fair to blame US President Donald Trump's policy for job cuts, Lakshmikanth said it is not fair because he has fulfilled the promise after winning the elections. "How can we blame Trump, for he has fulfilled the election promise of giving jobs to local people including IT professionals by tightening H1-B visa norms, which were being misused by companies by paying less to foreign professionals working in US. It is for companies to tackle the situation, and such situation they have undergone in previous years. It is not new for them. They know to tide over it," he said. Lakhsmikanth also said it is not fair even to target the Indian government as the IT industry grew on its own in India, but at later stages respective state governments and central governments provided them facilities like land or creating special economic zones, among others. The government however sought to allay fears of large scale layoffs by tech firms in India saying the IT sector remains "robust" and is, in fact, moving beyond plain-vanilla back office services to highly skilled jobs. IT Secretary Aruna Sundararajan said the IT companies have assured that there is "nothing unusual" this year and decision to not renew some contracts were part of the annual appraisal process. "Some of the companies which have been named (as undertaking job cuts) have clarified that there is nothing big this year," she said on the sidelines of Broadband India Forum event. Over the past few weeks, there have been reports of layoffs across the IT sector. Tech majors like Wipro, Infosys, Cognizant, and, more recently, Tech Mahindra have initiated annual performance reviews, a process that weeds out bottom performers or non performers. This has added to fears that thousands of employees in the sector could be shown the door over the next few weeks. "As part of annual appraisals, they may not be renewing contract of some people but it is absolutely incorrect to assume that suddenly this year a large number of jobs are being shed," Sundararajan said. Stating that the Indian IT sector will grow at 8-9 per cent this year, the IT Secretary exuded confidence that the industry will continue to hire in large numbers as new technologies like digital payments, cyber security, big data and cloud gain traction. "Any report that is interpreting this change as a large scale loss of jobs in the IT sector would be factually misleading and incorrect," she said. The IT Ministry's views echo with that of industry body Nasscom, which has been on an overdrive to assure the tech fraternity that the sector continues to be a "net hirer" with over 1.5 lakh people being employed on net basis every year. In a statement, Nasscom had said that reports of mass layoffs were incorrect, and that workforce realignment, linked to performance appraisal processes, were a regular feature every year. Sundararajan today said that the IT sector will continue to hire and has added five lakh jobs in the last 2.5 years. The issue needed to be looked at "holistically", she noted. The reports of large scale layoffs have compounded the worry in the industry, as the sector is already battling challenges in the business environment and stricter work permit regime in countries like the US, Singapore, Australia and New Zealand.