- Joined
- Oct 23, 2013
- Messages
- 26,183
- Points
- 113
NOVEMBER 25, 2019
Employees of Indian Software giant Infosys Technologies Limited on the campus of the company's headquarters in Bangalore on July 14, 2017. Photo: AFP/Manjunath Kiran
Indian IT workers facing massive layoffs
A rise in people losing their jobs in the IT industry is hitting mid- and senior-level managers the hardest
ByKS KUMAR
As India’s information technology (IT) companies grapple with slowing growth, emerging technologies and the US government’s tighter visa norms, Indians in the industry face an uncertain future.Industry veteran T V Mohandas Pai has warned that India’s IT services companies may fire 30,000 to 40,000 employees before the fiscal year ends on March 31, 2020.
Indian IT services companies are increasing their hiring numbers in the US, despite higher costs, to counter the increasingly stringent norms of the H-1B visa program that allows companies to temporarily employ foreign workers in the US in specialty occupations.
Infosys has already hired more than 10,000 people in the US and set up six key innovation hubs during the past couple of years. The software services exporter has also reduced dependence on H-1B visas significantly during the past two years.
The country’s largest software services exporter, Tata Consultancy Services, is focusing on strategic hiring across geographies to contain higher subcontracting costs.
Rise in layoffs
All these measures are now causing pain to employees working in centers in India. The worst-hit are the mid and senior-level managers, who have put in 10-15 years. In the last few quarters, there has been a rise in layoffs in the IT industry.
For the first time, Infosys recognized layoffs as a part of its overall attrition during the second and third-quarter earnings call. It was about 1.4% in the September quarter.
Cognizant, another IT services giant, has shrunk the bench time from 60 days to 35 for those employees who are not on any billable projects. After 35 days they could be asked to leave. Employees reluctant to relocate to other work locations, take up different projects or move to new domains risk early exits.
After years of clocking double-digit growth, Cognizant’s momentum has now slowed to single digits. In an effort to regain the earlier trajectory, the company is trying to build a workforce that is more agile and responsive to the changing client requirements.
Cognizant had earlier said it will part with nearly 13,000 employees in the coming months, of which nearly 5,000 will be reskilled to see if they fit into new roles.
The Teaneck, a New Jersey-based company, has 70% of its 290,000-strong workforce in India. During the upcoming layoffs, they are expected to bear the brunt.
French IT services firm Capgemini has undertaken a massive reskilling of its employees in emerging technologies. Last month the company laid off 500 employees after some of its customers scaled back projects.
The company claims it has reskilled more than 51,000 employees in 2019 in technologies such as cloud and big data. Last year it had upskilled 60,000 employees through its Upskill Drive Academy.
Tata Consultancy Services said it is increasing the variable pay component of employees’ pay packets, linked to performance. The 50-year-old company has formulated a ‘pyramid rationalization’ process and aims to have a larger proportion of employees with less than four years of experience and fewer employees with progressively more experience.
The company is looking to have a reduced salary bill and a workforce more savvy about emerging technologies. Though Chief Financial Officer N Ramakrishnan has ruled out any layoffs in the near future, industry experts feel there could be an uptick in performance appraisal related exits.
Tata Consultancy Services has also hired 30,000 graduates from Indian universities through its TCS National Qualifier Test as it looks to deal with change in skillset requirements for emerging technologies.
Former Chief Financial Officer of Infosys Mohandas Pai described these job losses as a once-in-five-years phenomenon as the industry matures. He pointed out that there will be many people in the middle level who will not be adding value to the salary they get.
Promotions are okay when companies are growing fast but when it slows down, people getting fat salaries will aggregate at the higher level, prompting companies to periodically reset their pyramids, and shed people, he said.
Spike in visa rejections
After the Trump administration tightened its visa norms, the number of rejections of H-1B visa applicants has risen four-fold from 6% in 2015 to nearly 24% this year. The denial rate for H-1B visas for initial as well as continuing employment was higher among major Indian IT companies than their US counterparts.
For Tata Consultancy Services, the denial rate for initial employment jumped from 4% in 2015 to 34% this year. It was 2% to 45% for Infosys and Wipro had to contend with a whopping 53% rejections this year against 7% four years ago.
On the other hand, for US companies such as Amazon, Microsoft, Intel and Google, it was a very marginal rise and none of them had more than 10% rejections.
For continuing employment, the denial rate was high for Indian IT companies. For Tech Mahindra, it increased from 2% to 16% during the same period, while for Wipro it increased from 4% to 19%, and Infosys from 1% to 29%. In the case of most US companies, it was less than 5%.
