Layoffs in Indian IT Industry With Increasing Global Pressure

In the last few months Indian IT Industry has seen routine layoffs and this seems to be followed in the future as well. It is contrary to what the Indian government says on employment and what the narrative is. Let us understand it in brief.

The Companies Planning Layoffs and those who have already done this:

Tata Consultancy Services or TCS, Capgemini, Cognizant, Wipro, Infosys and Tech Mahindra are the top companies that have seen mass layoffs this year. Cognizant asked their 1000 executive to voluntarily resign which came as a shocker. They also have planned to dismiss 2.3% or 6000 people from their work force. Another giant Indian IT company Wipro removed 600 of its employees immediately and eventually dismissed 2000 employees.

The same was followed by TCS, which removed 3000 of its employees in 2014-15. Capgemini, a French IT company issued a layoff of 9000 employees or roughly 5% of their workforce. 1000 layoffs were witnessed in Infosys where the company has reduced new hiring by 60%. Another IT company Tech Mahindra issued a layoff of 1500 of its employees this year.

Immense Global Pressure Leading Layoffs in IT Industry:

There are two factors that have been ruling layoffs in IT sector. The one is automation and the other is Trumps’s protectionist policies. Let us discuss the first one. Automation has remained the biggest and more certain reason for such layoffs. The rising automation has reduced the workforce to a new level. India is expected to lose 1M jobs in the next 12-18 months due to automation. It is also expected that there will be a 69% decline in jobs due to automation and the unemployment is expected to rise by 18M by 2018.

The other reason is Mr. TRUMP! Donald J Trump, the President of US is keen to make America great again. His protectionist policy is causing job loss for many Indians as India has a $60B earnings from US in IT sector. Trump wants that US companies hire Americans instead of foreigners. He has planned to change H1B norms so that it becomes tough for foreigners to get employment in USA; furthermore Australia too has scrapped 400 laws relating visa allowance for foreign job holders. Most of the IT companies are criticizing Mr. Trump for this situation.

Observations from these Layoffs:

Many top companies have seen decline in growth by huge percentage. They have stopped hiring new graduates and are very harsh on senior employees. Automation alone is killing jobs. Indians and India may learn a lesson for life from this crisis. India does well in economy because of its IT industry but the collapse is causing huge loss to India as most Indian IT companies outsource their work.

The future also seems to be against the IT employees with present specialization as automation will hit into its best in the upcoming time plus we may see more right wing protectionist governments in the world.

The Ideal Lesson for India:

India needs to focus more on entrepreneurship than being just a vendor industry. Being the Mecca of IT specialists, India is still deprived from founders like Mark Zuckerberg or Bill Gates. It is not possible to employee millions of IT aspirants in the growing automation. The only solution is entrepreneurship.