1. As IT layoffs rise, NASSCOM says all is well but Rajat Gupta says panic is well placed

As IT layoffs rise, NASSCOM says all is well but Rajat Gupta says panic is well placed

As the number of Indian IT employees that may reportedly be laid off grows, NASSCOM has sought to assure that things are well in the IT industry but former McKinsey boss Rajat Gupta has said that the Indian IT industry should be in a 'panic' mode.

By: | Published: May 18, 2017 7:58 PM
Almost 56,000 Indian information technology professionals may reportedly lose their jobs this year due to major companies ramping up automation at work in a bid to improve operating margins and firm up sagging bottom lines.

As the number of Indian IT employees that may reportedly lose their jobs grows by the day, NASSCOM sought to assure that things are well in the $ 155 billion industry saying IT sector will hire about 1.5 lakh people this year on a “net” basis although techies will have to re-skill themselves to stay relevant.

“We categorically reject the reports of mass layoffs in the sector. FY2017 saw 1.7 lakh people being added, while in Q4 alone, the gross hiring was of over 50,000 by top five companies,” Nasscom President R Chandrashekhar said.

However, former McKinsey boss Rajat Gupta said that the Indian IT industry ‘rightly’ should be in ‘panic’ mode as it has not kept pace with the fast-changing innovations of technology.

“The Indian IT industry is in panic and rightly should be because technology is overtaking them and they haven’t invested in it,” Gupta said.

Almost 56,000 Indian information technology professionals may reportedly lose their jobs this year due to major companies ramping up automation at work in a bid to improve operating margins and firm up sagging bottom lines.

Indian IT companies are investing heavily in automating processes in their traditional businesses such as BPO, application management and infrastructure management to improve operating margins in a rapidly evolving landscape. This has left these companies with surplus manpower, as an increase in automation requires fewer people – to be deployed only for advanced roles, as tedious tasks can be put on automation to improve efficiencies.

Tech experts have been cited expressing concerns that proposed hyper-automation and Artificial Intelligence paint a bleak future for the sector, as when implemented these would drastically reduce the need for human resources.

“Over the last three years, there has been an increase in the use of new technologies like AI (Artificial Intelligence) and virtual reality and even the traditional projects are becoming highly automated,” Infosys Chief Executive Officer Vishal Sikka had said earlier.

The high number of possible layoffs highlights the tight spot Indian information technology companies find themselves in. On one hand, reducing client spends and pricing pressures are squeezing these companies’ margins and bottom lines, while on the other hand, increasingly tougher work visa regimes by countries like the US, UK, Singapore and Australia, are hampering these companies ability to carry on with their operations in such countries in a cost-effective manner. To cope up with the stricter visa norms, Indian IT firms are ramping up local hiring in such countries. Infosys being a case in point, which plans to hire 10,000 Americans in the next two years and open four centres in the US.

  1. Francis Leo Gunseilan
    May 18, 2017 at 9:55 pm
    Lay off in IT and related industry is purely to save money by not employing mid level managers and to recruit base level engineers and get the workdone. The reasons cited by all is out of context and misleading. IT employees are as such unprotected by the law endorsing agencies. The IT companies who all enjo the tax holidays and many other benefits at the cost of Indian public should pay back to the Indian employee's by not adopting hire and fire policy. Whereas. France and Germany the work council is very strong and the respective government's are protecting the employee's..unlike the poor Inadian IT employees...they are treated worst than the daily wage employees. Even the compensation paid is far from satisfactory levels.
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