Indian IT firms are witnessing their slowest growth in a decade, while global firms are shifting their budgets from traditional IT services to newer areas such as digital and cloud.
New Delhi: Once India’s global claim to fame, the country’s information technology (IT) sector is seeing a spate of layoffs by IT majors like Tech Mahindra, Wipro, Infosys and Cognizant.
The churn in the IT sector — which is moving towards increasing automation, use of artificial intelligence and is beset by tightening visa regulations — is likely to affect mid-level employees with 10-15 years of experience the most, as many are averse to learning new skills, industry experts have said.
Further, Indian IT firms are witnessing their slowest growth in a decade, while global firms are shifting their budgets from traditional IT services to newer areas such as digital and cloud, which require engineers to engage with clients instead of working remotely. Even as this shift takes hold of the sector, automation is increasingly taking over low-end maintenance work, forcing companies to shift workers to other projects and reduce hiring from campuses.
Tech Mahindra joins the bandwagon
Software services firm Tech Mahindra has sacked a thousand-odd employees this month. However, what happened at Tech Mahindra is not an outlier, other IT majors like Wipro, Cognizant, Infosys and Capgemini are also facing their own share of challenges, and moving to either prune or re-skill their respective workforce.
“We have a process of weeding out bottom performers every year and this year is no different,” a Tech Mahindra spokesperson said.
As on December 31, 2016, the company’s total employee headcount stood at 117,095, while the software division had 80,858 employees.
Wipro was the canary in the coal mine
Late in April, Wipro sacked around 500 of its employees as part of its appraisal process. The company is reported to have weeded out “non-performers” after a “rigorous performance appraisal”.
While Wipro did not specify the exact number of affected employees, the company said it “undertakes a rigorous performance appraisal process on a regular basis to align its workforce with the business objectives, strategic priorities of the organisation, and requirements of our clients”.
“This systematic and comprehensive performance evaluation process triggers a series of actions, such as mentoring, retraining and up-skilling. The performance appraisal may also lead to the separation of some employees from the company and these numbers vary from year to year,” it said.
In fact, Wipro, India’s third-largest software exporter, has a programme Band Inertia, which looks at scrutinising employees for performance in the same band for longer periods, identify gaps to reskill, and mark out those who are unable to upskill with newer technologies. (Read more)
The real bloodbath could be at Cognizant
US-listed IT major Cognizant Technology Solutions, which has a significant workforce in India, is said to be reducing its employee count by as much as five per cent, which translates to close to 10,000 workers.
Also, as reported last week, the Nasdaq-listed solutions provider has floated a voluntary separation option for its employees at the senior management level.
Globally, the company employs around 260,000 employees, of this around 75% of the workforce is based in India.
Here too, according to what the company spokesperson told Business Standard, the layoffs will take place as part of the Cognizant’s performance review process. Typically, the bottom one per cent of the workforce is weeded out for non-performance, a common practice across IT firms as part of the annual appraisal exercise. The appraisal process generally ends by March.
This year, the appraisal cycles came in the backdrop of a recent report by advisory firm McKinsey & Company, which said that almost half of India’s 3,700,000-strong IT services workforce will be “irrelevant” over the next three-four years. In fact, industry body Nasscom has also said that both freshers and existing employees should look at self-learning to stay relevant at a time when digitisation is causing disruption in the industry. (Read more)
Like Wipro, Infosys too tightens appraisal process
While Wipro has Band Inertia, Infosys is also undertaking a similar exercise for mid-level professionals, scrutinising their performance when the company is shifting its focus on automation and delivering software-led services to its clients.
“A continued low feedback on performance could lead to performance actions, including separating an individual, and this is done only after feedback,” said Infosys in a statement. Around 1,000 people may be impacted in the bi-annual assessment at the tech major.
Also, as reported earlier, Infosys could hand out pink slips to hundreds of mid- and senior-level employees as it carries out bi-annual performance review amid a challenging business environment.
(Published with arrangement with Business Standard)