Currently, IT industry is laying off thousands of employees around the world including India, as pressure mounts on the IT segment due to non-performance, lack of projects and rightsizing surplus staff with an uncertain business environment.
Why Would This Happen?
In the last two years, gradually, global IT companies have reduced their headcount as they move ahead to automation and related technologies.
The crisis created by the coronavirus outbreak has further accelerated the process as fresh challenges are emerging for these firms.
Which IT Companies Are Affected?
In case of International Business Machines (IBM) Corp., they are laying off over 2,000 employees globally as the company is going through restructuring.
In India, it may impact a few hundred of the employees as India accounts for almost one-third of IBM’s global headcount of around 350,000 employees.
Recently, IT giant Cognizant Technology Solutions Corp. has also laid off thousands of employees in India, who was on bench.
Basically on bench employees are “non-billable” resources as their cost is not billed to any client hence, the company has to take their burden.
That’s why most companies try to maintain a very small percentage of bench employees so that they are prepared to execute new projects immediately.
Recently, State IT employee unions in Karnataka and Chennai have alleged that Cognizant is having a mass layoff after benching nearly 18,000 employees across India.
What Does Cognizant Say?
According to a Cognizant spokesperson, the layoffs are likely to be performance-based exits, he said, “Performance management is a normal process across all companies in the IT industry, including Cognizant.”
While analysts say that on bench employees will inevitably be the first ones to be laid off.
The CEO and chief analyst, Greyhound Research, Sanchit Vir Gogia said, “Layoffs are obvious. The existing business models of these IT companies are under tremendous pressure as new deals are very hard to come by. Even the deals that come are much smaller, take longer to close and are more outcome-based. Also, the existing contracts are being renegotiated. Bench employees are non-billable so they would be hit first,”.
Gogia said, “In terms of profile, employees with critical skills like artificial intelligence (AI), data science, and user experience are likely to be retained for longer than the infrastructure services workforce. Also, expensive roles such as senior project managers with 8-12 years of experience and not associated with any outcome-based roles are vulnerable as well as the most basic ones who are not trained or involved in repetitive tasks,”.
Apart from these, another IT major, Accenture is in the process of slashing up to 900 jobs in the UK in the process of cost reduction.
So far, Indian IT services companies such as Infosys Ltd, Tata Consultancy Services (TCS), Wipro Ltd, and HCL Technologies Ltd may not have gone through any massive layoff exercise but no one is denying a performance-based exit.
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