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Large-scale IT job losses

A result of the Sector’s Unpreparedness

Large-scale IT job losses

Friday June 16, 2017,

3 min Read

Major lay offs that sprouted in the beginning of May, has brought a highly worrying news of the impending large-scale layoffs facing the IT sector in India. The projections about the number of job losses have steadily grown from a few thousands to several lakhs as per industry experts. While this gloomy scenario is being attributed to myriad factors such as the automation wave in the industry, the effects of demonetization, and Donald Trump’s protectionist legislation, the IT industry cannot but take the blame for the severity of the situation. These factors have contributed to, and indeed magnified, the scale of the disruption we are witnessing. However, in my opinion, they have only served to push a situation that was already finely balanced over the edge.

The makings of this problem started about 3-4 years ago when hiring in the Indian IT sector began slowing down, and then gradually declining.

This was primarily due to two reasons.

One, the industry was focusing more and more on bottom lines rather than revenue, and consequently bench strength was being seen as a liability rather than an asset.

Two, the first wave of automation and Artificial Intelligence was visible over the horizon in the US and Europe, and companies were hedging against further investments in human capital.

However, this didn’t result in any active measures on their part - such as reskilling of their existing workforces to be automation-ready- in order to deal with the evolving reality.

Coming to the present situation, yes, demonetization did cause IT companies to cut down on their hiring to an extent. But the IT sector, not being cash-dependent, was reasonably well-insulated against it unlike some other sectors that were badly affected. Also, its impact largely coincided with the last financial quarter when hiring is in any case on the lower side.

Donald Trump’s new H1B Visa policy merely served to accelerate the problem. While a few of the IT biggies were forced to hire locally in the US, the numbers are rather miniscule compared to the job losses being projected now. As many commentators have pointed out, it was expected that he would fulfill his campaign promises, and IT companies in India did have an inkling of what would follow.

The onus is now entirely on the IT sector to contain the problem and to find sustainable solutions that would help avoid such situations in the future. In the short term, companies will have to focus on reskilling or upskilling their employees so that they will be better integrated with their newly automated work environments. The sector will have to work closely with the Government to minimize the fallout - in terms of Indian job losses - of the H1B legislation.

In the long term, companies will have to look towards highly innovative solutions such as transitioning to liquid workforces. This will not only help in streamlining their operations through better resource utilization, but also in ensuring that the capabilities of their employees are used in the best possible way.