Forty-three-old Sanjeev Sharma (name changed) thought his life was sorted after he secured a job at a reputed IT company in Bengaluru. He bought a house on hefty EMIs and enrolled his kids in an expensive school. But everything changed in his recent performance review. “My boss told me the management has cost optimisation targets and has therefore decided to let go of some employees. My name too was on the list,” said Sharma brusquesly.
He is not alone. Many jobs in the sector are facing a threat from growing automation and changing global headwinds. Not only are the US, the UK, Singapore and other economies creating fewer jobs for Indian IT professionals, robots are eating into the jobs of white-collar IT professionals as well as blue-collar workers in other industries. The only way to stay safe is to stay relevant: Up-skilling.
Number Crunching: A Tragic Tale In April 2016, the industry that employs about 4 million people in India posted an impressive 40 per cent growth in new jobs creation, as per Naukri Job Speak Index. But more recently, it posted a bleak 8 per cent growth in number of jobs created in February 2017 compared to January 2017.
The hiring at IT majors — Tata Consultancy Services (TCS), Infosys, Wipro, Cognizant and HCL Technologies — was muted. These companies hired around 60,000 engineers from campuses in 2016 compared to more than 100,000 last year — most of the decline was due to changing demand in IT services from developed countries.
Industry body Nasscom in its annual review said that while the industry grew at 8.6 per cent, jobs grew only 5 per cent in FY16-17. It also said that there is going to be a 20-25 per cent reduction in jobs over the next three years.
H1B Visa Implications With the focus on “hiring Americans”, there will be fewer jobs for Indians. While full clarity on H1B visa reforms will come later, from next year visas would go to applicants with the highest wages and skills. While this would swell spends of Indian IT services companies by 20-25 per cent, resulting in them importing fewer Indians, it will be good for some Indian employees. Experts believe Indians graduating with advanced degrees in the US and highly-skilled professionals in India applying for H1B jobs should be able to find jobs with higher wages and better working conditions.
Indian IT companies are gearing up for challenges in labour management along sharp increase in costs. The tech firms earn 60 per cent revenues from the American market, with 20 per cent from Europe and the remaining from other countries.
The confusion over H1B visa reforms had sent company stocks southwards. As much as $6.4 billion went up in smoke. While Infosys stocks fell 4.5 per cent, TCS by 5.5 per cent, Tech Mahindra by 9.7 per cent, HCL Technologies by 6.3 per cent, Wipro shrunk by 4.1 per cent. Stocks of other mid-cap IT companies such as NIIT, Geometric, Mphasis, Mindtree and KPIT Technologies plunged to 4 per cent.
The number of US employers seeking H1B visas for outstation employees too has reduced. Employers seeking visas for 2017 have submitted 199,000 applications compared to 236,000 in 2016. Indian IT firms such as Wipro, TCS, and Infosys, which bank on cheap Indian workers, will be hit.
Countries such as Australia, and New Zealand are also putting visa restrictions. No worker visas have been issued by Singapore for Indian IT professionals since 2016. UK has also stopped issuing short-term visas for all tech workers in their country.
Automation and Robotics The appetite for traditional jobs is decreasing. According to a World Bank report, automation threatens 69 per cent of the jobs in India. “There will be 20 per cent reduction in entry level jobs due to automation. There will be 40-50 per cent job losses in onsite jobs due to visa reforms. This is applicable to large IT firms like Wipro, TCS , Mahindra etc,” said Shailesh Singh, VP and head – recruitment business at PeopleStrong, HR solutions firm. “The need of the hour for every company is to sensitise employees across the board about the need for constant re-skilling. Companies need to invest in training the staff on emerging technologies,” says Sangeeta Gupta, Senior Vice President, Nasscom.
French IT firm Capgemini, which employs nearly one lakh engineers in the country, said a majority of the Indian workforce cannot imbibe the required emerging skill-sets, and warned of high job losses at the middle and senior levels. “It is a challenging task and I tend to believe that 60-65 per cent of them are just not trainable,” Srinivas Kandula, CEO, Capgemini India, said in February.
Leading IT recruiters echoed similar concerns. “We are not going to see increase in hiring numbers like we posted in the past. Lateral hiring will be fairly flat,” says Sucharita Palepu, Global Head, HR, Tech Mahindra. “Clients have become smarter. Automation has reduced the demand of workforce for some functions, niche skilled candidates are only sought after,” says Sunita Rebecca Cherian, Vice President HR, Wipro.
Last year, for the first time in over two decades, Wipro and HCL Technologies reported a net decline in direct hiring. Infosys, which has been vocal about its automation strategy, has reportedly “released” 8,000-9,000 employees in the past one year because of automation.
IT services company Cognizant, is reportedly planning to lay off over 6,000 employees out of its 1.55 lakh-strong workforce in the country. Wipro is also expected to sack 600 employees.
But layoffs no way indicate that Indian IT outsourcing is nearing its end. It merely emboldens the need to upscale technology and reskill people.
