Nasscom Warns Of Layoffs In IT Sector; Clients From These Sectors Hardest Hit
According to the industry body, Nasscom, the Indian IT services companies may have to resort to job cuts to rationalize costs in the short term if the global economy doesn’t improve in the next three quarters.
What Does Nasscom Say?
In an interaction, Debjani Ghosh, Nasscom President said that the companies may be compelled to take this route for survival as the “last option”, given the importance of talent for the industry.
Ghosh said “As the economy continues to get impacted, there will be a business impact. We have to do cost rationalization whether we like it or not. So, in the short run, I definitely see some level of impact and I don’t know how much it will be. I am hoping that this will be minimal,”.
“If the business doesn’t recover in the next 6-10 months, there might be situations where there would be some lay-offs…That may be required for survival and to ensure livelihood to millions of people,” he added.
What About IT Companies?
Basically, the IT industry is going through tough times, as many clients have been forced to close their establishments globally as part of the containment measures to check the spread of Covid-19.
As per Business Standard, enterprises in travel and hospitality, aviation, retail, automotive, and manufacturing sectors have been hit the hardest in the past three months.
Further, this has led to delays in renewals of new projects to cancellations of ongoing outsourcing projects.
Although, with all this hardship, the Indian IT industry has not resorted to cutting jobs and is currently pursuing other cost optimization moves.
Additionally, many of the IT biggies such as TCS, Infosys, HCL Technologies, Wipro, and Tech Mahindra have said that they would continue hiring from college campuses, albeit in a lower number in 2020.
Ghosh said, “In the IT business, talent is the most important thing. So, letting talent go is the hardest decision any company can take. As an industry, we take all our efforts to keep our people. We honor our job offers. Companies are trying all kinds of steps, including reducing salaries (to save jobs),”.
Also, most IT companies are operating on work from home (WFH) mode with more than 90 percent of their employees working from remote locations.
Nasscom sees the model continue for some more time, despite relaxation in the lockdown norms.
What Do Companies Say?
As per the industry body, while around 10 percent of employees are likely to operate from office by the end of May, as compared to around 5 percent now, this will be increased to around 15 percent in June.
However, the Nasscom president said the industry body doesn’t see WFH as the new operating model.
On the same line, Ghosh said “The future is not going to be WFH. It will be a blended model (both work from home and office) for large companies. A lot of romanticization is happening with respect to WFH but there are a lot of issues that need to be sorted for this model to work,”.