IT companies may shed up to 40,000 mid-level employees: Mohandas Pai

‘It’s going to happen again and again and again every five years,’ said Pai

India’s information technology services companies may shed 30,000 to 40,000 middle-level employees this year as growth slows down, IT industry veteran T V Mohandas Pai said Monday. The former Chief Financial Officer of IT major Infosys Ltd termed these job losses as once-in-five-years normal phenomenon with maturing of the industry.

“As in all sectors in the West, in India too when a sector matures so many people will be there in the middle level who will not be adding value to the salary they get,”Mohandas Pai PTI. Promotions are okay when companies are growing fast but when it slows down, people getting fat salaries will aggregate at the higher level, prompting companies to periodically reset their pyramids, and shedding people, he said.

“It’s going to happen again and again and again every five years,” said Pai, Chairman of Aarin Capital and Manipal Global Education Services. “Nobody is entitled to a fat salary and high-paying job unless you perform, right? You have to deliver value”. “All across industry, may be 30,000 to 40,000 in a year…,” he said when asked about the number of middle-level staff who would lose their jobs. But Pai said about 80 per cent of those who lose jobs would have employment opportunities in industries in general if they are specialists….

Trump wrong about H-1B? Threat of 'being Bangalored' illogical: US study

In fact, report says immigration bans will lead to greater outsourcing by US firms

 

 

Did US President Donald Trump get his H-1B visa math wrong? A report by a US think tank, the National Foundation for American Policy (NFAP), thinks he did.

One of the key findings of the report was that fears in the US that H-1B visas granted to foreign workers, especially Indian techies, were draining the job market of opportunities for the natives were exaggerated at best, and, "illogical" if seen in the context of data.

The 9,356 new H-1B petitions for the top seven Indian-based companies approved in financial year 2016 represent "only 0.006 per cent of the US labour force" , the report said, adding that while the "threat of job loss has long been exaggerated by critics, it reaches illogical proportions when discussing fewer than 10,000 workers in an economy that employs 160 million workers nationwide".

In April this year, Trump signed an executive order called 'Buy American and Hire American' to protect the American industry from unfair competition and stop the "misuse" of H-1B visas| economy news

• The numbers just don't add up

According to the 'H-1B Visas by the numbers' report by NFAP, the April 2017 unemployment rate in the US for "computer and mathematical science" occupations was 2.5 per cent – a very low rate, even lower than the 4.4 percent for "all occupations", according to Bureau of Labor Statistics data. The unemployment rate for "architecture and engineering" occupations is even lower at 2.1 per cent.| economy policy

• More jobs than workers
• Visa restrictions could actually kill more jobs
• Trump's lower wages argument may be wrong too

Carnage in Indian IT? As Wipro fires 500, here is what other cos are doing

Trump's tightening H-1B visa norms, AI and automation are weighing heavy on India's IT workers

 

Wipro's move to sack around 500 of its employees as part of its appraisal process is indicative of the churn in India's information technology (IT) sector — which is moving towards increasing automation, use of artificial intelligence and is beset by tightening visa regulations.

he company is reported to have weeded out "non-performers" after a "rigorous performance appraisal". However, what happened at Wipro is not an outlier, other IT majors like Cognizant, Infosys and Capgemini are also facing their own share of challenges, and moving to either prune or re-skill their respective workforce. (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, as reported in March this year

Globally, the company employs around 260,000 employees, of this around 75 per cent 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.| (READ MORE)

Get rid of 3-month notice period: Techies ask govt to ease quitting process

latest | The government should make it easier for IT professionals, who are expecting single-digit hikes in the coming financial year, to exit their jobs, an online petition signed by over 28,000 professionals has demanded, reported The Economic Times on Thursday.

Their complaint? The three-month non-negotiable notice period that most IT firms hold their employees to. According to the report, the petition said, "It is unrealistic for anyone to plan that far ahead for their future actions and resign in advance not knowing state of the issue in next three months." The petition has been addressed to the Union Ministry of Labour & Employment.

Speaking to the financial daily, an IT professional, who did not want to be named, said that no company would be willing to wait for three months while their new employee serves out his or her period at their old firm. Further, the report said that Tata Consultancy Services, Infosys, Tech Mahindra, HCL Technologies, Capgemini, Accenture and IBM had a three-month notice period in place.

Growing pains

Indian companies are likely to provide single digit increments to their employees in 2017, across industries, an Aon Hewitt survey said recently. “The survey projects a drop in pay increases to an average of 9.5 per cent across industries. While it’s a marginal decrease from the 2016 (10.5 per cent) spends, it reflects maturity that India Inc has displayed amid global and Indian economic and political events. This includes recent changes in the US government and the much-talked demonetisation,” the report said. Aon Hewitt, the global talent, retirement and health business of Aon plc, conducted its 21st annual survey after speaking to more than 1,000 companies.

The Indian IT sector, and its employees, will not escape this predicament either. According to ET, Tech Mahindra has already suspended the salary revision process for employees with more than six years of experience, pending a management review.

The petition comes at a time when the IT sector is gearing for a shake up. As reported earlier, Indian IT services players may have to re-skill significant chunks of their workforce to drive the digital technology transformation. A report from global advisory firm McKinsey & Company, which was presented at the Nasscom India Leadership Forum last month, said that nearly half of the workforce in the IT services firms would become “irrelevant” over the next three-four years. 

Further, digital disruption is not the only thing worrying the industry. Last month, industry body Nasscom unexpectedly postponed issuing a growth projection for 2017-18, a first in 25 years, in the wake of uncertainty due to regulatory changes in the US and the macroeconomic outlook. 

(Read more)