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Coronavirus impact: Tech hiring to take a hit; layoffs likely

According to experts, most firms have delayed the hiring process by 4-6 weeks. Appraisal hikes may also see a 2-3 percent drop as well this year.

March 16, 2020 / 05:31 PM IST
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Representative Image

Hiring by global in-house centres in India may see a 30 percent drop from last year due to the coronavirus outbreak.

The sector, especially startups, is likely to see more layoffs if the virus outbreak contines to wreak havoc, feel experts.

Global firms that have setup offshore centres in India, are one of the biggest job creators in the country. They employ about eight lakh people across their 1,500 centres in India and generating revenue of about $23 billion, according to a report by Peepal Consulting.

Kamal Karanth, co-founder, Xpheno, a specialised staffing firm, told Moneycontrol that close to 25 captives opened in India last year and hired close to 5,000 people. However, this number is likely to come down as the coronavirus has made the execution a challenge.

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India has banned entry of all foreign nationals till April 15 with exceptions, such as diplomatic visa. Some of the worst-affected countries have a similar ban in place. This means that international firms have to put their business plans on the backburner.

A European firm is slated to open its centre in the next few months but is bound to face difficulty getting the talent and office space right now.

"There is a limitation as to how much you can do virtually," Karanth said, adding that this will translate to 30 percent drop in hiring if the situation continues for a month.

For IT firms, the biggest hit would be lateral hires. The Indian Indian IT sector employs about 40 lakh people. According to a survey by staffing firm Teamlease Services, the sector  generated 2.5 lakh jobs in 2019. However, 2020 may see a drop given the uncertain circumstances.

A recent note  by Kotak institutional investors pegged IT sector growth in the range of 3-8 percent.

According to experts, most firms have delayed the hiring process by 4-6 weeks. Appraisal hikes may also see a 2-3 percent drop as well this year. In addition, with sectors across under stress, performance pressure will also be high, leading to more layoffs, pointed out experts.

However this will have more impact on startups than on bigger firms. Last couple of quarters has seen startups laying off thousands of employees. Oyo had laid off close to 2000 employees and Zomato around 500, according to reports. The layoffs will continue to increase.

Rituparna Charkraborty, co-founder, Teamlease Services, a staffing firm, pointed out that as demand slows down, it will impact startups and might result in layoff. She explained that unlike bigger firms, they don’t have deep pockets and have to be frugal.

This has already started happening. According to reports, close to 5000 Oyo employees will be laid off across the world due to coronavirus outbreak. More firms will follow suit.

Cab aggregators especially are facing the heat as more people avoid taking public transport and cabs and have started working from home. Pravin Agarwala, co-founder, The Better Place, a blue-collar management firm, said cab aggregators are already witnessing drop in demand and this drop would go up to 30-40 percent if the situation continues.

There has been a 5 percent drop in overall growth of gig economy workers, added another source.

However, there is certain segment that is seeing growth – demand for delivery boys. With more people stuck at home, grocery players and food delivery is see spike in demand due to panic buying.

Anivar Aravind, a techie from Bengaluru, said in a tweet that delivery span of grocery services has rapidly increased to multiple days. For instance, big basket is seeing a surge and are unable to fulfil orders in 24 hours turnaround time. But it is taking anywhere between 3 and 5 days, said Chakraborty.
Swathi Moorthy
first published: Mar 16, 2020 05:31 pm

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