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Largest IT Companies Planning to Layoff More Than 57,000 Engineers This Year

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Business world | BW Disrupt | 05 June, 2017 by BW Online Bureau  |

Automation and digitization will mostly impact mid and senior level professionals with 5-15 years’ experience and 20 lakhs package.

A report from wisdomjobs.  com says technological advancements like automation and digitization are going to affect the careers of IT professionals in the IT and telecom industries. Most impacted will be the mid-level and senior level professionals with 5-15 years’ experience and 20 lakhs package. Digitization and restructuring will be driven by need to adopt newer technologies in artificial intelligence (AI), robotic process automation and cloud computing. The report further mentioned that half the Indian IT workforce will be treated as irrelevant unless they are reskilled or adapt to new technologies. India’s largest IT services companies are planning to layoff at least 57,500 engineers this year. This number may increase in coming years. Layoffs will be more in Tier 1 and 2 cities.

Extent of layoffs

While the IT industry is shifting towards digital technologies and automation, a majority of the workforce cannot be trained with the required skill-sets or will not be required, and companies warned of high job losses at middle and senior levels. Out of the 24 lakhs employees, only about 50 percent, or approximately 12 lakh, can be re-trained and about 6 lakh can manage with existing skills. The rest, approximately 6 lakh professionals will lose their jobs over the next three years. However, preparing the ground for layoffs, many IT companies have already put a higher number of employees on notice by awarding them the lowest ratings in the appraisal process. Major IT companies in India are looking to implement cost cutting strategies by laying off more employees with high salary packages on account of a “more rigorous” performance evaluation process. The number is at least twice the employees laid off by the companies last year, reflecting their under-preparedness in adapting to newer technologies and dealing with the fallout from US President Donald Trump’s protectionist policies.

Why layoffs?

On average 4.1 million IT employees come from low-grade engineering colleges which do not follow rigorous grading patterns for students in their zeal to maintain good records. Recruitment experts opined that the quality of the students is so bad that many of them are not able to answer even questions from subjects taught in the final semester. The recent study revealed that nearly 81.5 percent of engineering graduates are unemployable. Companies are laying off mid-level and senior level employees with 5-15 years of experience professionals for the roles such as team leads, programme manager, supervisor or engineering managers to hire freshers who come at a cheaper cost. Effect will be on mid and senior level professionals as they should retrain themselves in the new technologies in order to save from the automation. IT companies are giving pink slips for the jobs in manual testing, technology support and system administration since these are increasingly going to be managed by AI and robotics process automation based systems. Recruiting experts believed that it is a challenging task that nearly 60-65% of them are not trainable, as Indian IT sector will witness the largest unemployment in the middle level to senior level grade.  This year, hiring activities saw a 65% decrease in the last fiscal 2016-17, due to increasing automation and thrust on artificial intelligence in its operations and projects.

Layoffs in Tier 1 cities 

According to Wisdom Jobs data, Tier 1 cities like Delhi/NCR, Mumbai, Kolkata, Chennai, Hyderabad and Bangalore saw 30% growth in updating profiles for mid-level and senior level employees. Bangalore saw 15% growth in updating profile for mid-level employees. On average there was 15% mid-level and senior level employees across Tier 1 cities registered with job portal Wisdom Jobs to survive from layoffs.

Layoffs in Tier 2 cities 

Since last week, Tier 2 cities like Gurugram, Surat, Pune, Bhubaneshwar, Chandigarh and Lucknow witnessed minimal 20% increase in updating profiles for mid-level and senior level employees. Meanwhile, only 5% mid-level and senior level professionals registered with Wisdom Jobs for better job opportunities.

Layoffs in Tier 3 cities 

It was reported that Tier 3 cities like Allahabad, Udaipur, Agra, Ajmer, Meerut, Kanpur and Kota saw consistent registrations for mid-level professionals and there was only 10% mid-level and senior level professionals updated their profiles on Wisdom Jobs. Interesting fact is that there was a 10% decline in new registrations of senior level employees in Tier 3 cities. Layoffs in the information technology (IT) and business process outsourcing (BPO) sectors is expected to continue this year with the pace of job creation slowing down. Several people employed in IT and related sectors in Gurugram have already started looking for options in other sectors, including pharmaceutical and smartphone manufacturing. However, media reports predict that job cuts will be more in tier 2 and 3 in cities like Coimbatore or a few remote places for employees earning rupees 20 lakh and above.

Both Indian and foreign-based IT companies have slashed their workforces in Chennai, Bangalore, Hyderabad, and New Delhi. The mass layoffs have been most widespread in the southern city of Bangalore, the Silicon Valley of India also. IT employees in Pune have applied to a smartphone manufacturing facility in Bangalore as there is more stability in that sector. Those layoffs have been implemented for “under-performance,” a term that companies frequently use to cover up its cost-cutting to boost profits. Some IT companies in Bangalore have offered a voluntary separation package to the top level senior executives like its directors; associate VPs and senior VPs, to adopt strategies of automation and digital technology.

Re-skilling to meet the new age technology needs

As many Indian IT companies have been started adopting newer technologies such as cloud computing, they are fast moving from a people-led model, which requires less human interaction. As well as many IT companies have adopted the automation tools to replace the routine, repeatable tasks that were performed by an army of engineers earlier. While increasing automation may kill many jobs, new aged functional areas like cybersecurity, Internet of Things (IoT), robotics, artificial intelligence and machine learning are creating new job opportunities. It is the time to reskill to be relevant and employable in the industry.

However…

Companies continue to invest in developing and up-skilling internal talent to take on better jobs while driving a strong performance culture. It is also an opportunity for IT professionals to upgrade themselves and get into the new-age technologies where demand will be huge. Industry body NAASCOM stated that layoffs number is exaggerated as there were no mass layoffs in the IT industry. It was a regular process of manpower realignment during the appraisal process, now focus is shifted from scale to skill. – Courtesy

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