As untrue as it sounds, the IT industry has been hit pretty badly in the Covid-19 era.
It is not just the big shots of the industry that have indulged heavily in employee layoffs but with Q1 coming to an end, we found out that a similar suit was followed by mid-sized companies too.
It has been reported that mid-sized companies have laid off about 500-1,200 employees (on an average) in the 1st quarter, in extension to making no new additions.
Number of Lay-offs In Mid-Sized Cos
Indian IT giants like Infosys, Wipro, HCL and TCS fired more than 9000 employees in the last quarter.
The numbers were no better for the mid-scale Indian IT companies.
- Hexaware reduced its size to 18,825 employees, cutting out 1,173 headcount, until June end.
- NIIT Technologies reduced 442 employees, with 10,598 employees remaining by the same period.
- Mphasis laid off 255 employees, now standing with an employee base of 26,143.
Mindtree was the only company to register an increase of 36 employees in Q1, resulting in employee count of 21,991.
The last time the condition was this bad, it was the global financial crisis of 2008-09.
What is the Major Reason
Covid-19 has caused a total haphazard in the business of IT sector.
Clients of this industry have reduced, or in many cases put a stop on their discretionary spendings.
This has resulted in lesser number of projects being attributed to IT companies, affecting billable hours.
Anuj Sethi, Senior Director, CRISIL Ratings believes that due to such a situation, clients have turned towards reducing risk factors and deferring IT spendings, even though it will continue to process existing contracts.
Despite some clients continuing to invest in the ongoing projects, several existing contracts are getting renegotiated, resulting in companies to push towards practicing automation.
Due to this, freshers and lateral entries are taking a back seat, as companies are currently focussing more on utilising the present strength upto 75-80%
This being said, many large IT space companies are also honoring previous job offers and onboarding new employees.