Almost 56,000 Indian information technology professionals may reportedly lose their jobs this year, though not all of it will be on account of the US President Donald Trump’s restrictive visa policies, but due to major companies ramping up automation at work in a bid to improve operating margins and firm up sagging bottom lines.
The total number of US work visas issued to Indian techies in the last two years is nowhere close to the number of jobs reportedly on line. Indian IT companies were issued less than 20% of the 65,000 odd H-1B work permits in the fiscal year 2016 and 2017, according to NASSCOM.
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. (read more)
“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.
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.
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Earlier this week, news reports said that India’s fifth-largest IT services firm Tech Mahindra is planning to lay off close to 1,500 employees across all levels, i.e. nearly 1.2% of its workforce.
Bellwether Infosys too has reiterated in a letter to its employees that the company would undertake performance based exits. In the past one year, Infosys has reportedly retrained and reassigned around 9,000 employees from low-end roles to more advanced roles. Further, it cut its hiring to just 5,700 people in the first nine months of 2016, compared to the 17,000 employees it hired in the previous year.
Last week, Cognizant, a US-based IT major with operations in India, had rolled out a voluntary separation programme for directors, associate vice-presidents and senior vice-presidents, offering them six to nine months of salary, amid reports that it is seeking to lay off about 6,000 people. Last month Wipro, India’s third-largest IT company, had reportedly sacked 300-600 employees to “align its workforce with business objectives, strategic priorities of the organisation and requirement of its clients”.
The high number of possible layoffs showcases the tight spot that 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, due to increasingly tougher work visa regimes by countries like the US, UK, Singapore and Australia, these companies are finding it even more difficult to carry on with their operations in these countries in a cost-effective manner.
To cope up with the stricter visa norms, Indian IT firms are ramping up local hiring in those 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.