Moneycontrol PRO
Upcoming Webinar:Join us for 'The Future Techshot' on Sept 22, 10:30am to gain insights into role of tech in streamlining businesses. Register Now!
you are here: HomeNewsBusiness

IT layoffs: Where will mid and senior-level employees find jobs

Top IT firms such as Cognizant, Infosys and Capgemini are laying off mid and senior level employees.

November 23, 2019 / 09:03 AM IST

Till a month ago, Ravi N* was a senior project manager in a top IT firm, taking home a decent pay package. Like any other middle-class household, he had invested in a beautiful house in Bengaluru and his children were going to expensive private schools in the garden city.

Little did he know then that after 22 years of service, he would be asked to go, with no support and shouldering a loan of Rs 40 lakh.

“I’m a grown man, dependent on my father who is not earning,” said Ravi, who is in his late 40s, his voice quivering. “But what can be done?” 

“When you join a private firm you know that you could be let go any time but rarely does it dawn on you that it could be you someday,” Ravi said.

No matter what, life goes on, he said.

Close

Now, Ravi's mornings typically start with a check of job-search platforms. Nervously waiting for a call back from a position he applied for and then look for more jobs.

“Just hope I will get lucky this time,” he said, after applying for a position of a senior project manager in an IT firm.

Ravi's routine, with some variations, is followed by 20,000 mid and senior-level managers to be laid off by IT firms such as Cognizant, as they look to cut costs and restructure their mid and senior management level.

While senior management jobs encompass roles such as directors, senior vice president and vice president with an average 15-year experience, middle managers are the regional and divisional managers, with an experience of 10 years.

The last few quarters have seen a rise in involuntary attrition, a euphuism for layoffs in the IT industry. 

For the first time, Infosys recognised involuntary attrition as a part of its overall attrition during the second and third-quarter earnings call. It was about 1.4 percent in the September quarter.

Brian Humphries, during the earnings call for the quarter, said the company will lay off close to 12,000 people at the mid and senior levels. 

The company did not disclose details but a source said a plan for the proposed layoffs was being drawn and it was, too, early to say how it will pan out.

 Why the layoffs?

For one, most IT firms are top-heavy, with few at the bottom of the pyramid. These firms are now trying to restructure the pyramid by stepping up fresh hiring and laying off seniors, which will save them money.

According to Cognizant, its restructuring will save around $550 million annually. Though Infosys is yet to respond to queries from Moneycontrol, CFO Nilanjan Roy, in a recent analyst meeting, said that the company was looking at saving around $150 million and will increase fresh hiring. It is not clear if senior management layoff is a part of its cost-saving strategy.

 Not a surprise

According to Mohandas Pai, former CFO, Infosys and chairman, Aarin Capital, “This is not surprising in the least. For the Indian software industry has a very fat thick middle, which are highly paid people.” 

The Indian IT industry witnessed a high growth over a decade ago and the firms went on a hiring spree. These employees, now middle and senior managers, are overseeing projects and dealing with customers rather than the technical aspect of projects.

At the same time, technical expertise is gaining prominence, thanks to the digital wave sweeping the market. 

The enterprises are going through a transition, moving from the legacy system to digital. This has resulted in the demand for new-age skills such as cloud, automation and data scientists, which the younger generations are focusing on and firms are willing to pay a premium for them.

According to Ashish Agarwal, Policy Head, NASSCOM, that is the reason every company has to periodically let go of employees to right-size the pyramid.

“That is what the company that just announced the restructuring is trying to do,” said an industry expert.

“It is true,” said Sudhakar K*, a senior manager with an IT firm. He still has his job but he is worried as his industry peers are being handed pink slips.

Over the last 15 years, Sudhakar’s role has changed from that of a software developer, when he started out, to that of one facing clients and delegating work to freshers. He handles one project or at times two. Most of his time is spent responding to emails and client queries. 

“Mostly, not very productive,” he said. “With so many people being asked to go, I cannot help but wonder when would be my turn.” 

 Opportunities?

Are there enough opportunities for these 20,000 plus experienced professionals? How do they start afresh in a crowded market?

There are no easy answers.

On paper, senior professionals are in demand in the startup space that needs experienced hands for guidance. In recent times, India has seen a mushrooming of global in-house centres, which, too, need senior techies.

“There are about 1.6 lakh job openings across IT firms, captives, startups and non-tech sector transitioning to the digital. Of these, senior-level jobs will account for less about 10-12 percent, which would be 19,000 jobs,” Kamal Karanth, co-founder, Xpheno, a specialised staffing firm, said.

That means not all senior professionals would get placed and even those who are qualified, have to compromise, Supaul Chanda, Business Head, Teamlease Digital, an IT staffing firm, said.

 

The challenges

“There are four major challenges for these professionals – skills, salary, location and timing of the offer,” Karanth said.

Reskilling and upskilling have become a must and unless the professionals invest in catching up, they are unlikely to get a job. 

The other issue is the salary and location. They should be willing to move to smaller cities, Tier II and III, given the oversupply of talent in the metros. Secondly, they should be willing to take a pay cut.

Take Mithun K* for instance. When Mithun was laid off, he had to relocate to Odisha from Bengaluru and took a pay cut of 10-15 percent to work for a mid-tier firm. Earlier, he was a part the top management in a prominent IT firm in Bengaluru.

The average salary for a senior project manager ranges from Rs 15 lakh to Rs 20 lakh annually, according to reports.

“When there is oversupply, firms would obviously go for people who are cheaper,” Chanda added.

*All names have been changed to protect identity

 
first published: Nov 22, 2019 06:01 pm

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark