Indian IT firms are expected to lay off between 80,000 to 120,000 lakh people over the next two quarters.
Trimming the fat
“Tech firms went into a hiring binge during the pandemic; now they have excess staff,” said B.S. Murthy, chief executive of Leadership Capital, a CXO recruitment firm.
“The industry may lay off anywhere between 80,000 to 120,000 people over the next two quarters,” he said.
Cutting costs despite sufficient capital
An anonymous HR head of a large Indian IT services firm said that several HR officials are now in the process of making a list of ‘dispensable’ employees.
Kamal Karanth, co-founder, Xpheno, a specialist staffing company believes that there is reason for concern when large tech firms with ‘loads of cash’ lay off people in the thousands.
Google-backed Dunzo fired 3% of its staff amounting to around 90 people, on January 16.
The move was announced a week after the startup raised $240 million in a round of funding.
Reasons behind the layoff trend
There are five reasons behind the ongoing mass firing spree.
- Over-hiring during the COVID-19 pandemic
- Investors are pushing the company management to counter slowdown in growth
- Negative cash flows and dismal earnings
- Companies are anticipating a recession
- The tech sector is maturing
“Copycat behavior”
Jeffrey Pfeffer, a professor at the Stanford Graduate School of Business, said “copycat behavior” is also a factor behind the worrying trend.
However, layoffs don’t actually contribute to the improvement of a company’s performance, he added.
Startups
Over the past two years, more than 30,000 people in the Indian tech sector lost their jobs.
In January so far, Indian startups such as Dunzo, Sharechat, Rebel Foods, Captain Fresh, BharatAgri, Ola, DeHaat, Skit.ai, Coin DCX, LEAD School, Bounce, Cashfree have sacked several hundred employees.
Ola let go of about 130-200 employees in January while Cryptocurrency exchange CoinDCX fired about 80-100 employees.
Growing numbers
As per a Crunchbase News tally, more than 46,000 workers in US-based tech companies have been laid off in mass job cuts so far this year.
Last week IT behemoth Google announced that it will fire 12,000 employees.
Amazon
Amazon is reported to be selling some of its US offices after laying off 18,000 employees this financial year.
Of this, 1,000 staff will be laid off in India.
Meta
Meta laid off over 11,000 employees in early November, shrinking its headcount by 13%.
It has also suspended hiring through the first quarter of 2023.
Major tech cos
Twitter, which fired half of its workforce after Elon Musk took over has announced more job cuts this year.
IBM fired 3,900 employees and SAP is cutting almost 3,000 jobs.
Intel is slashing hundreds of jobs in Silicon Valley as well.
Microsoft will cut about 10,000 positions.
Coinbase announced 950 job cuts in an attempt to cut costs.
