Fewer jobs, more layoffs: Why pace of hiring has slowed in Indian IT

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Indian IT industry, the biggest job creator until a few years back witnessed negative growth this year when it comes to hiring. The USD 150 billion industry has started cutting back on hiring as part of a strategy to tackle the menace of slowing earnings and to catch up with existing technologies existing in the market.

The numbers

An earlier copy from Moneycontrol reported that Infosys, the second biggest IT company in India hired 6,320 people in 2016, compared to 17,857 people in 2015. A reduction of about three times.

Wipro, the country's third largest software services company, laid off about 600 employees this year. Sources also speculate the numbers could be as high as 2,000.

Media was abuzz with the news that US-based IT firm Cognizant may fire as much as 10,000 employees in 2017. Its total employees stood at close to 1,50,000 in 2016.

A report from Mint shows that five mid-tier Indian IT services companies which included companies like WNS Global Services, Mindtree, Cyient, Zensar Technologies Limited and Persistent Systems saw their total workforce size shrink by seven employees with WNS seeing the highest reduction at 374.

The reason behind the slowdown

While the industry may try and hide itself behind Donald Trump for all its woes, the reality is the crisis was always brewing silently and the industry is just using Trump effect to mask the issues.

While one cannot take out Trump factor as a reason behind this crisis, the real villain behind the whole issue has been declining revenue growth and automation platforms.

Out of a 4 million strong IT services employee, a large majority are employed in manual coding jobs which are old-fashioned and non-existent in the future. The jobs are soon slated to be replaced by automatic coding and cloud computing.

Global advisory firm McKinsey & Company, in a presentation to Nasscom said, nearly 50 percent of all the workforce in IT industry will be “irrelevant” over next 3-4 years.

Capgemini CEO feels nearly 60-65 percent of its existing workforce are just not trainable.

Slow revenue growth and adoption of newer technologies — cloud computing and automation platforms — have started replacing engineers, says an earlier report from Moneycontrol.

Who’s saying what:

"Adapting to automation will be a bigger challenge for the IT industry than the incoming Donald Trump administration in the US", said Vineet Nayyar, Vice Chairman of Tech Mahindra.

“The advent of technologies like data analytics, AI (artificial intelligence), machine learning and migration to the cloud and platform-based applications means that there has been a gradual shift in the nature of the work and it takes significantly lesser amount of efforts to do the same work, and this is one of the primary reason why (hiring in) the traditional IT services business is going down,” Anand Deshpande, chairman and managing director, Persistent Systems told Mint.

“The closest analogy I can draw to our decline in workforce is that somebody who was very fit, put on a little weight, became obese, and is now shedding excessive weight. Hiring should increase for this year and we will become strong again,” Rostow Ravanan, chief executive officer (CEO) of Mindtree told Mint.