Info-tech

Nightmare on IT St: thousands to be sacked

Varun Aggarwal Venkatesh Ganesh KV Kurmanath Mumbai/Bengaluru/Hyderabad | Updated on January 27, 2018 Published on May 09, 2017

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Automation, changing business models force firms to ease out senior, mid-level employees

Infosys, Tech Mahindra and Wipro, which went on hiring frenzies when times were good, are today in the process of laying off thousands of their workers across various locations and experience levels.

Increasing levels of automation, changing business models and costlier visa regimes are forcing these and other software companies to hire fewer and fire more employees than ever before.

A 56-year-old female techie, for instance, was recently asked to resign from a software firm after over 25 years with the company. With a compensation package of over ₹1 crore, she is finding it impossible to get a job that will pay her even half as much. Thousands of software professionals like her across the country are at the same crossroads without any job security.

Bengaluru-based Infosys will lay off over 3,500 senior and mid-level employees. According to sources within the company, employees in job level 5, 6 and 7, which consist of technical lead, technical test lead, senior architects, group project managers, project managers and delivery managers have been asked to quit. However, this will be done in a phased manner, over the next couple of quarters, sources said. Infosys currently has two lakh employees.

When contacted, a Infosys spokesperson said, “Our performance management process provides for a bi-annual assessment... with reference to the goals individuals have on business objectives and other strategic priorities for the company. We do this every year and the numbers could vary every performance cycle. A continued low feedback on performance could lead to certain performance actions, including separation of an individual...”

Employees working in these bands typically earn ₹20 lakh and above, and are in the 30-50 age group.

Tech Mahindra is expected to lose about 7,000-8,000 employees in one of the biggest layoffs in the company’s history, sources told BusinessLine. The company had 117,095 employees till the end of December.

Most of these job losses will be from Tech Mahindra’s software division, which employs about 80,000 people. Tech Mahindra’s spokesperson did not immediately respond to a query from BusinessLine.

Similarly, a few weeks ago, Cognizant unveiled a ‘separation plan’ for 10,000 employees people or about 5 per cent of its staff. And Wipro said it would lay off 500 employees after what it called a 'rigorous performance appraisal’.

“It is complete mayhem,” said an industry insider. “People at all levels are being asked to leave and jobs are hard to find for those who have been working for 15-20 years on technologies that are seen as getting obsolete now.”

Companies are under pressure to maintain margins and adapt to the new technology shifts that require different skillsets.

Slowing growth

All this bad news comes amid slowing growth for IT companies. Infosys, for example, had reported subdued earnings for the March quarter and gave a weak forecast for 2017-18. Overall, the industry is pegged to grow at 8-10 per cent this year, against 12-15 per cent earlier. Add to that, use of robotic process automation in almost every field within the IT sector is cutting down requirements of human intervention by more than half, rendering tens of thousands of people redundant and their skillsets obsolete.

Industry watchers believe that more layoffs are inevitable. Sanchit Vir Gogia, Founder, Greyhound Research, believes that companies under margin pressures will increasingly look at their workforce pyramid.

Kris Lakshmikanth, CEO at recruitment firm Headhunters, told BusinessLine, “This is a tsunami that is not expected to go away anytime soon. We expect about one lakh people to lose their jobs by next year. We have seen resumes from more than 1,000 vice-president-level people from across IT companies who have recently been asked to leave; it is a challenge finding a job for them as companies only want people with digital skills now.”

The situation is made worse by increases in H-1B visa fees and tighter visa restrictions in the US, the UK, Australia and Singapore. Indian IT services companies say their costs are rising but customers may not be willing to pay.

“Increases in visa fee will lead to cost increases, but we don’t know if we can pass them on to customers. Our business is not an elastic model wherein I can increase the cost and the customer will pay me automatically. Most of our value proposition is based on the value we create for them,” Mindtree CEO Rostow Ravanan said.

Published on May 09, 2017
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